-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KZGFzhf2x0v/awOJM4AUBDENFeQdcJQPEHdQf08G5c39I255JD9eIQTGBxj+7geO hT17hW/HcRdNfEn9EsQBfg== 0001047469-98-028036.txt : 19980723 0001047469-98-028036.hdr.sgml : 19980723 ACCESSION NUMBER: 0001047469-98-028036 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19980713 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980722 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEOLOGISTICS CORP CENTRAL INDEX KEY: 0001015527 STANDARD INDUSTRIAL CLASSIFICATION: ARRANGEMENT OF TRANSPORTATION OF FREIGHT & CARGO [4731] IRS NUMBER: 223438013 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-42607 FILM NUMBER: 98669818 BUSINESS ADDRESS: STREET 1: 13952 DENVER WEST PARKWAY CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3037044400 MAIL ADDRESS: STREET 1: 13952 DENVER WEST PARKWAY CITY: GOLDEN STATE: CO ZIP: 80401 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL LOGISTICS LTD DATE OF NAME CHANGE: 19971126 8-K 1 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JULY 13, 1998 GEOLOGISTICS CORPORATION - ------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) DELAWARE 333-42607 22-3438013 - ------------------------------------------------------------------------------- (STATE OR OTHER JURIS- (COMMISSION FILE (IRS EMPLOYER DICTION OF INCORPORATION) NUMBER) IDENTIFICATION NO.) 13952 DENVER WEST PARKWAY, GOLDEN, COLORADO 80401 - ------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 704-4400 - ------------------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) - 1 - ITEM 2. ACQUISITION OF DISPOSITION ASSETS On July 13, 1998, GeoLogistics Corporation (the "Company") purchased substantially all of the operating assets and assumed certain of the liabilities of Caribbean Air Services, Inc., a Delaware corporation ("CAS"), a wholly-owned subsidiary of Amertranz Worldwide Holding Corp., a Delaware corporation ("Holding"), for aggregate cash consideration of $27,000,000. CAS is a provider of air logistics services between the United States, Puerto Rico, and the Dominican Republic. A copy of the purchase agreement has been attached hereto as Exhibit 2.1. The purchase price, which was determined by the parties through arm's length negotiations, was funded by a combination of borrowings under a newly-executed $15,000,000 credit agreement (the "New Credit Facility") and proceeds from the private placement of the Company's Series A Participating Preferred Stock (the "Preferred Stock"). On July 10, 1998 the Company executed the New Credit Facility by and among the Company and ING (U.S.) Capital Corporation and the lenders party thereto. The loan is unsecured and is evidenced by promissory notes in aggregate principal amount of $15,000,000 due October 15, 2007. Borrowings under the facility are guaranteed by certain direct and indirect domestic subsidiaries of the Company and the Company's Canadian subsidiary, each of which is either a borrower or guarantor under the Company's existing loan agreement or its 9 3/4% Senior Notes due 2007. At the Company's option, interest will accrue on the loan with reference to either the average of prime commercial lending (or equivalent) rates publicly announced by certain banks plus 1.75% or the offered rate for deposits in dollars in the London interbank eurodollar market ("LIBOR") plus 3.75%. With the exception of mandatory prepayments in connection with certain change of control events, certain sales of equity interests of the Company and certain asset dispositions, the New Credit Facility does not contain any mandatory prepayment provisions. The New Credit Facility provides that the Company may prepay loans in whole or in part without penalty, subject to reimbursement of the lender's breakage and redeployment costs in the case of prepayment of LIBOR loans. The credit facility contains certain covenants and restrictions on actions by the Company including, without limitation, restrictions on indebtedness, liens, guarantee obligations, mergers, creation or dissolution of restricted subsidiaries, investments, loans, advances, dividends and other restricted payments, transactions with affiliates, sale and leaseback transactions, prepayment of or amendments to junior obligations, entering other lines of business and amendments of other indebtedness. The description of the Credit Facility set forth herein is qualified in its entirety by reference to the complete text of the agreement that has been attached hereto as exhibit 10.27. On July 13, 1998 the Company sold 11,000 and 4,000 shares of Preferred Stock to OCM Principal Opportunities Fund L.P., and Logistical Simon, L.L.C., respectively (the "Investors"), for aggregate consideration of $14,550,000. The Preferred Stock has a liquidation value of $1,000 per share and was sold to the Investors for $970 per share. The holders of the Preferred Stock are entitled to payment of quarterly dividends when, as and if declared by the board of directors of the Company in amounts ranging from $30.00 per share per quarter to $45.00 per share per quarter, which amount shall be determined based upon the occurrence of certain events that are specified in the Certificate of Designation relating to the Preferred Stock. Dividends on the Preferred Stock will - 2 - accrue and be fully cumulative (whether or not declared) and will bear interest at rates ranging from 14% per annum to 18% per annum, depending upon the occurrence of certain events that are specified in the Certificate of Designation. Upon redemption of the Preferred Stock or liquidation of the Company, the holders of Preferred Stock will be entitled to receive the following for each share of Preferred Stock held by such holder: (i) (a) $1,000, representing the liquidation preference of the Preferred Stock plus (b) all accrued and unpaid dividends, whether or not declared multiplied by (c) the applicable liquidation or redemption premium, and (ii) either ten shares of common stock of the Company or the amount of the fair market value of ten shares of common stock of the Company. The Preferred Stock has no mandatory redemption feature and ranks senior to the Common Stock of the Company for payment of dividends and upon liquidation. The description of the Preferred Stock contained herein is qualified in its entirety by reference to the Certificate of Designation of the Preferred Stock attached hereto as Exhibit 3.2. - 3 - ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) The required audited financial statements of CAS are attached hereto as Exhibit 99.1. (b) The required pro forma financial statements will be provided by amendment to this Form 8-K.
Exhibit No. Description - ----------- ----------- 2.1 Purchase agreement dated as of June 15, 1998 by and among the Company, Caribbean Air Services, Inc. and Amertranz Worldwide Holding Corp. 3.1 Amended and Restated Certificate of Incorporation. 3.2 Certificate of Designation of Series A Participating Preferred Stock. 4.5 First Supplemental Indenture dated as of July 13, 1998 by and among GeoLogistics Air Services Inc., a wholly owned subsidiary of GeoLogistics Corporation, and U.S. Bank Trust National Association, as trustee. 10.1 Fourth Amended and Restated Stockholders Agreement dated as of July 10, 1998 by and among the Company and the holders listed on Exhibit A attached thereto. 10.25 Amendment No. 1 to Amended and Restated Loan Agreement. 10.26 Amendment No. 2 to Amended and Restated Loan Agreement. 10.27 Credit Agreement dated as of July 10, 1998 by and among the Company as borrower and ING (U.S.) Capital Corporation as administrative agent and the Lenders party thereto. 10.28 Registration Rights Agreement dated as of July 13, 1998 by and among the company and the holders listed on the signature pages thereof. 99.1 Financial Statements of Caribbean Air Services, Inc. as of and for the year ended December 31, 1997.
- 4 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GEOLOGISTICS CORPORATION Date: July 22, 1998 By: /s/ Gary S. Holter ---------------------------- Gary S. Holter Chief Financial Officer EXHIBIT INDEX
Exhibit No. Description - ----------- ----------- 2.1 Purchase agreement dated as of June 15, 1998 by and among the Company, Caribbean Air Services, Inc. and Amertranz Worldwide Holding Corp. 3.1 Amended and Restated Certificate of Incorporation. 3.2 Certificate of Designation of Series A Participating Preferred Stock. 4.5 First Supplemental Indenture dated as of July 13, 1998 by and among GeoLogistics Air Services Inc., a wholly owned subsidiary of GeoLogistics Corporation, and U.S. Bank Trust National Association, as trustee. 10.1 Fourth Amended and Restated Stockholders Agreement dated as of July 10, 1998 by and among the Company and the holders listed on Exhibit A attached thereto. 10.25 Amendment No. 1 to Amended and Restated Loan Agreement. 10.26 Amendment No. 2 to Amended and Restated Loan Agreement. 10.27 Credit Agreement dated as of July 10, 1998 by and among the Company as borrower and ING (U.S.) Capital Corporation as administrative agent and the Lenders party thereto. 10.28 Registration Rights Agreement dated as of July 13, 1998 by and among the company and the holders listed on the signature pages thereof. 99.1 Financial Statements of Caribbean Air Services, Inc. as of and for the year ended December 31, 1997.
EX-2.1 2 EXHIBIT 2.1 EXHIBIT 2.1 ASSET PURCHASE AGREEMENT EXECUTION COPY THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into as of the 15th day of June, 1998 by and between CARIBBEAN AIR SERVICES, INC., a Delaware corporation ("CAS"); AMERTRANZ WORLDWIDE HOLDING CORP., a Delaware corporation ("Holding"); and GEOLOGISTICS CORPORATION, a Delaware corporation (the "Purchaser"). EXPLANATORY STATEMENT CAS is a wholly-owned subsidiary of Holding. CAS desires to sell and the Purchaser desires to purchase all of the assets used in the business of CAS, on the terms and conditions hereinafter set forth. NOW THEREFORE, for the mutual consideration set out herein, the parties hereto agree as follows: 1. DEFINITIONS; RULES OF CONSTRUCTION. 1.1. For purposes of this Agreement, the terms set forth below shall have the following meanings: AFFILIATE - Any person or entity that directly, or indirectly through one of more intermediaries, controls or is controlled by or is under common control with the person or entity specified. For purposes of this definition, control of the person or entity means the power, direct or indirect, to direct or cause the direction of the management and policies of such person or entity whether by Contract or otherwise. AMERTRANZ GROUP - Holding and CAS, collectively. ASSUMED OBLIGATIONS - As defined in Section 3. ASSUMPTION AGREEMENT - The Assumption Agreement substantially in the form attached hereto as EXHIBIT A, together with such other good and sufficient instruments of assumption, in form and substance reasonably acceptable to CAS and the Purchaser, as shall be effective to cause the Purchaser to assume the Assumed Obligations. BILL OF SALE - The Bill of Sale substantially in the form attached hereto as EXHIBIT B, together with such other good and sufficient instruments of conveyance, assignment and transfer, in form and substance reasonably acceptable to CAS and the Purchaser, as shall be effective to vest in the Purchaser good title to the CAS Assets . CAS - As defined in the introductory paragraph of this Agreement. CAS ASSETS - All of the assets of CAS including those listed on SCHEDULE 1.1 and the active, prospective, and historical customer lists for the past five years, related current and historical business records relating to prospective, active and inactive customers and business for the preceding five years (including pricing information, costing and vendor information as to transportation services); all equipment, vehicles, parts, tools, computers and computer equipment, and other assets; all associated computerized information relating to such business and customers (including computer disks and tapes); all information relating to current, historical, and planned marketing and sales of services; all interest in the name "Caribbean Air Services", and all service marks utilized in connection therewith; all local, 800 and international telephone and telefax numbers utilized by CAS in connection with its businesses; all goodwill; all pre-paid expenses; the leases for CAS's facilities, including all furniture, fixtures and equipment used in or held for use in each such facility or in connection therewith (subject to dispositions or replacements prior to Closing in the ordinary course of business); all of CAS's rights under the Freight Handling Agreement; all of CAS's rights under the CAS-D Freight Handling Agreement (including the right to receive commissions thereunder); all vendor, customer and sales representative contracts of CAS in connection with its business; all other contracts of CAS in connection with its business; all governmental licenses or authorizations with respect to the conduct of the CAS Business; all other licenses pursuant to which any assets used in the CAS Business are used; and all other tangible and intangible assets of CAS. "CAS Assets" shall not include any of CAS's cash on hand, cash in depositories, tax refunds, cash equivalents, accounts receivable, receivables due from Holding or any of Holding's subsidiaries, and any interest of CAS in the "Arthur J. Rogers" lease of space in Chicago. CAS BUSINESS - The business heretofore operated by CAS. CAS-D FREIGHT HANDLING AGREEMENT - The Freight Handling Agreement attached hereto as SCHEDULE 1.2, dated January 1, 1996, between CAS, Caribbean Air Services Dominica, Inc., a corporation organized under the laws of Puerto Rico, and such corporation's stockholders. CAS SHARES - All of the issued and outstanding shares of Common Stock of CAS, par value $.01 per share. CERCLA - The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the rules and regulations promulgated thereunder. CERCLIS - The Comprehensive Environmental Response and Liability Information System, as provided for by 40 C.F.R. Section 300.5. CLOSING - The closing of the transactions contemplated by this Agreement. CLOSING DATE - The later of (i) July 15, 1998, or (ii) 15 days following the expiration of the waiting period under the HSR Act, but in any event, no later than September 1, 1998, unless otherwise mutually agreed to by the parties in writing. CODE - The Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. CONTRACTS - As defined in Section 7.19. -2- EMPLOYEE BENEFIT PLANS - As defined in Section 7.25(i). ENVIRONMENTAL CLAIM - With respect to any person, any written or oral notice, claim, demand or other communication (collectively, a "claim") by any other person alleging or asserting such person's liability for investigatory costs, cleanup costs, Governmental or Regulatory Authority response costs, damages to natural resources or other property, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or Release into the environment, of any Hazardous Material at any location, whether or not owned by such person, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. The term "Environmental Claim" shall include, without limitation, any claim by any Governmental or Regulatory Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. ENVIRONMENTAL LAW - Any law or order relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. ERISA - The Employee Retirement Income Security Act of 1974, as amended, and the regulations issued thereunder. EXCHANGE ACT - The Securities Exchange Act of 1934, as amended. ESCROW AGREEMENT - the Escrow Agreement substantially in the form attached hereto as EXHIBIT C. ESCROW AMOUNT - As defined in Section 4.1.2. FACILITY LEASES - The current leases entered into by CAS with respect to leased office, warehouse, and terminal space and other real property. FAIRNESS OPINION - As defined in Section 13.1. FREIGHT HANDLING AGREEMENT - The Cargo Aircraft Charter Agreement dated February 28, 1994, between Florida West Airlines, Inc. and TIA, Inc., a Delaware corporation, assigned by TIA, Inc. to CAS and assigned by Florida West Airlines, Inc. to Tradewinds Airlines, Inc., a Delaware corporation, and the Cargo Aircraft Charter Agreement dated as of July 1, 1998 between Tradewinds Airlines, Inc. and CAS, all as attached hereto as SCHEDULE 1.2. -3- GAAP - United States generally accepted accounting principles. HAZARDOUS MATERIAL - (i) any petroleum or petroleum products, flammable explosives, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs); (ii) any chemicals or other materials or substances which are now or hereafter become defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants" or words of similar import under any Environmental Law; and (iii) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental or Regulatory Authority under any Environmental Law. GOVERNMENTAL OR REGULATORY AUTHORITY - Any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, territory, county, city or other political subdivision. HOLDING - As defined in the introductory paragraph of this Agreement. HSR ACT - The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. INDEBTEDNESS - With respect to any person or entity, all obligations of such person or entity, other than by Holding or any of Holding's subsidiaries to Holding or any of Holding's subsidiaries, (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), (iv) under capital leases, and (v) in the nature of guarantees of the obligations described in clauses (i) through (iv) above of any other person. LICENSES - As defined in Section 7.19. LIENS - Any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing. MARCH 31 BALANCE SHEET - The unaudited consolidating balance sheet of CAS prepared in connection with the unaudited balance sheet of Holding as of March 31, 1998 included in the SEC Filed Materials. NPL - The National Priorities List under CERCLA. ORDER - With respect to any person or entity, any judgment, order, writ or decree of any court, arbitrator or governmental agency by which such person or entity or any of its assets or properties is bound. PLAN AFFILIATE - As defined in Section 7.25(iii). -4- PURCHASE PRICE - As defined in Section 4.1. PURCHASER - As defined in the introductory paragraph of this Agreement. RELEASE - Any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata. REGULATIONS - Any laws, statutes, ordinances, regulations, rules, court decisions and orders of any foreign, federal, state or local government and any government department or agency including without limitation environmental laws, energy, motor vehicle and aviation safety, public utility, zoning, building and health codes, occupational safety and health regulations, laws relating to employment practices employee documentation, terms and conditions of employment and wages and hours. SEC - United States Securities and Exchange Commission. SEC FILED MATERIAL - The following documents filed by Holding with the SEC: Annual report on Form 10-K for the fiscal year ended June 30, 1997; Quarterly Report on Form 10-Q for the quarter ended September 30, 1997; Quarterly Report on Form 10-Q for the quarter ended December 31, 1997; and Quarterly Report on Form 10-Q for the quarter ended March 31, 1998. SECURITIES ACT - The Securities Act of 1933, as amended. TAX - Any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and any expenses incurred in connection with the determination, settlement or litigation of any Tax liability. TAX RETURN - Any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. 1.2. The Explanatory Statement is hereby incorporated into this Agreement and made a part hereof. 1.3. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 1.4. References in this Agreement to the "knowledge" of an entity shall -5- mean the actual knowledge of the chief executive officer, chief operating officer, and chief financial officer of such entity, to the extent applicable, including specifically the president/chief executive officer and chief financial officer of each of Holding and CAS, and the senior vice president of operations of CAS, and what they should have known after due and reasonable inquiry. 1.5. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, to the singular include the plural, to the part include the whole, and to the male gender shall also pertain to the female and neuter genders and vice versa. The term "including" is not limiting, and the term "or" has the inclusive meaning represented by the phrase "and/or". The words "hereof", "herein", "hereby", "hereto", "hereunder" and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, Schedule, Exhibit and clause references are to this Agreement unless otherwise specified. 2. PURCHASE OF CAS ASSETS. On the terms and subject to the conditions set forth in this Agreement, CAS hereby agrees to sell, transfer and assign to the Purchaser and the Purchaser hereby agrees to purchase from CAS, on the Closing Date, all of the right, title and interest of CAS in and to the CAS Assets. The Purchaser, at its option, may designate one or more direct or indirect subsidiaries of the Purchaser to purchase the CAS Assets and to which CAS will sell, transfer and assign the CAS Assets. 3. ASSUMPTION OF LIABILITIES. The Purchaser will not assume any of the liabilities, contingent or otherwise, of CAS or Holding for Indebtedness, refunds, payables, litigation, fines or penalties, employee obligations or otherwise, except for liabilities arising after the Closing pursuant to the following (the "Assumed Obligations"): (i) CAS's obligations under the Freight Handling Agreement and the CAS-D Freight Handling Agreement, and (ii) the leases and other agreements included in the CAS Assets for which the Purchaser receives the benefit following the Closing, whether by direct assignment or pursuant to Section 9.11. 4. CONSIDERATION. 4.1. The consideration for the CAS Assets (the "Purchase Price") shall be $27,000,000, paid as follows: 4.1.1. $25,000,000 paid at the Closing by wire transfer of immediately available funds in accordance with instructions provided by Holding to the Purchaser. 4.1.2. $2,000,000 (the "Escrow Amount") to be paid at the Closing by wire transfer of immediately available funds to the Escrow Agent (as such term is defined in the Escrow Agreement) to be held in accordance with the terms of the Escrow Agreement for the satisfaction of any claims by the Purchaser's Indemnities under Section 9.7, or for indemnification pursuant to Section 15.1 hereof, until the first anniversary of the Closing Date, subject to the terms -6- of the Escrow Agreement. The respective indemnification obligations of Holding and CAS hereunder shall not be limited to the Escrow Amount. 4.2. The Purchaser shall be entitled to the benefit of all prepaid rents, utility bills, license fees and other prepaid expenses of CAS as of the Closing Date. 4.3. CAS and the Purchaser shall jointly allocate the total purchase price among the CAS Assets and the parties shall attach such allocation schedule hereto as SCHEDULE 4. 5. CLOSING. 5.1. The Closing shall take place at the offices of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, 233 East Redwood Street, Baltimore, Maryland on the Closing Date at 10:00 a.m., local time, or at such other time and place as shall be agreed upon by the parties hereto. 5.2. Subject to the provisions of Section 9.11, at the Closing (i) CAS will assign and transfer to the Purchaser all of its right, title and interest in and to the CAS Assets (free and clear of all Liens), by delivery of the Bill of Sale, duly executed by CAS, (ii) the Purchaser will assume from CAS the due payment, performance and discharge of the Assumed Obligations by delivery of the Assumption Agreement, duly executed by the Purchaser, and the parties shall deliver the opinions, certificates and other contracts, documents and instruments required to be delivered by them, respectively, as set forth in Sections 11 and 12. 5.3. If, prior to the Closing, any of the CAS Assets are destroyed or damaged or taken in condemnation, the insurance proceeds or condemnation award with respect thereto shall be a CAS Asset. At the Closing, CAS and Holding shall pay or credit to the Purchaser any such insurance proceeds or condemnation awards received by it on or prior to the Closing and shall assign to or assert for the benefit of the Purchaser all of its rights against any insurance companies, Governmental or Regulatory Authorities and others with respect to such damage, destruction or condemnation. As and to the extent that there is available insurance under policies maintained by CAS and Holding or their respective affiliates, predecessors and successors in respect of any Assumed Obligation, except for any such insurance proceeds with respect to which the insured is directly or indirectly self-insured or has agreed to indemnify the insurer, CAS and Holding shall cause such insurance to be applied toward the payment of such Assumed Obligation. The provisions of this Section 5.3 shall not affect the right of the Purchaser not to close the transactions contemplated by this Agreement if the condition to its obligations hereunder contained in Section 12.1 has not been fulfilled. 5.4. Time is of the essence of this Agreement. -7- 6. ACCOUNTS RECEIVABLE. 6.1. All of CAS's trade receivables for services rendered by CAS on or before the Closing Date shall be and remain the property of CAS. PROVIDED, HOWEVER, that if, prior to the Closing Date, CAS has entered into an agreement with a customer to provide freight services but such services have not yet been provided on or before the Closing Date, the Purchaser will assume responsibility for providing such service (or the remaining portion thereof) and will be entitled to receive the compensation for such services (or the remaining portion thereof) performed by the Purchaser, equal to the direct costs relating thereto (including commissions) paid or incurred by the Purchaser following the Closing Date, plus a pro-rata share (based on the direct costs to provide such services, including commissions, incurred or paid by CAS or the Purchaser, respectively) of the profits with respect thereto. CAS represents that it has not collected, and undertakes that it will not collect, except as otherwise disclosed in SCHEDULE 6.1, any pre-payments from any customers, or invoices for any such services prior to the services having been completed. 6.2. For a period of five months from and after the Closing Date, and thereafter from month to month until the Purchaser shall give one month's advance written notice to CAS, the Purchaser shall, as agent of CAS, exercise its commercially reasonable efforts to diligently collect all receivables owned by CAS as of the Closing Date. To the extent so collected, the Purchaser shall pay over and remit bi-weekly (or, if less than $5,000 is so collected on any bi-weekly period, at such time(s) as such collections aggregate $5,000) to CAS the cash receipts of such receivables, as collected, together with an accounting of such amount, showing, for each receivable collected, the payor and invoice value, the amount of the payment and any other information regularly available from the accounts receivable system included in the CAS Assets. All such cash receipts shall be received by, and held in trust by the Purchaser for the benefit of CAS. The Purchaser shall not resolve any disputed receivables with any account debtor without the consent of CAS. In the event that any such dispute is not resolved, the Purchaser, as agent for CAS, shall, at the discretion of CAS, place such receivable for collection and the cost and the expenses of collection shall be the exclusive responsibility of CAS. 6.3. As compensation to the Purchaser for the accounts receivable collection services set forth above, CAS and Holding will collectively pay to the Purchaser five percent of all proceeds so collected in excess of 90% of the face value of all such accounts receivable (I.E., face value less reserves and allowances for doubtful accounts, discounts, uncollectability, etc. consistent with past practice) on the Closing Date, other than receivables due from Holding or any of Holding's subsidiaries. For example, if the face value (gross receivables less allowance for doubtful accounts) of all such accounts receivable on the Closing Date is $8 million, and the Purchaser collects $7.5 million thereof, CAS will pay to the Purchaser $15,000 (five percent of the $300,000 collected in excess of $7.2 million (90% of the face amount)). Except with respect to remitting amounts collected to CAS as set forth in Section 6.2, the Purchaser shall not be liable for an amount owed on any accounts receivable. -8- 7. REPRESENTATIONS AND WARRANTIES OF CAS AND HOLDING. CAS and Holding, jointly and severally, represent and warrant to the Purchaser as follows: 7.1. HOLDING EXISTENCE AND GOOD STANDING. Holding is a corporation duly organized, validly existing, and in good standing under the laws of Delaware has the corporate power and authority to own, lease, and operate its properties and carry on its business as now being conducted by it, and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which such qualification is necessary under the applicable law as a result of the conduct of its business or ownership or leasing of its properties, and in which failure to be so qualified or in good standing will have a material adverse effect on its business or properties (owned, leased, or operated). 7.2. CAS EXISTENCE AND GOOD STANDING. CAS is a corporation duly organized, validly existing, and in good standing under the laws of Delaware, has the corporate power and authority to own, lease, and operate its properties and carry on its business as now being conducted by it, and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which such qualification is necessary under the applicable law as a result of the conduct of the CAS Business or ownership or leasing of its properties, and in which failure to be so qualified or in good standing will have a material adverse effect on its business or properties (owned, leased, or operated). 7.3. [INTENTIONALLY OMITTED] 7.4. [INTENTIONALLY OMITTED] 7.5. SUBSIDIARIES. CAS has no subsidiaries and does not, directly or indirectly, own any interest in or control any corporation, partnership, joint venture or other business association. 7.6. CHARTER DOCUMENTS AND BY-LAWS. Copies of CAS's and Holding's (i) Certificate of Incorporation, as amended to date, certified by its Secretary or Assistant Secretary within 30 days prior to the date hereof, and (ii) By-laws, as amended to date, certified by its Secretary or Assistant Secretary within 30 days prior to the date hereof are attached hereto as SCHEDULE 7.6 and are complete and correct in all respects, are in full force and effect, and neither entity is in violation of any of the provisions of its Certificate of Incorporation or By-laws. 7.7. POWER AND AUTHORITY; AUTHORIZATION. Each of CAS and Holding has full power and authority to enter into, execute and deliver this Agreement, and to perform its respective obligations hereunder. The execution, delivery, and performance of this Agreement by -9- CAS and Holding, in accordance with the terms of this Agreement, have been duly authorized and approved by the Board of Directors of CAS and the Board of Directors of Holding (as the stockholder of CAS) and no other approval of CAS, Holding or Holding's stockholders is required. This Agreement has been, and each of the Exhibits hereto and other documents required hereunder (if applicable) will be, on the Closing Date, duly executed and delivered by or on behalf of each of CAS and Holding and are the legal, valid, and binding obligations of such entity in accordance with their respective terms, subject (as to the enforcement of remedies) to laws of general application relating to bankruptcy, insolvency and the relief of debtors and (as to the availability of equitable remedies) to the discretion of the equity tribunal having jurisdiction. CAS is a wholly-owned subsidiary of Holding. 7.8. NO VIOLATIONS. The execution, delivery, and performance of this Agreement by each of CAS and Holding (i) will not violate (with or without the giving of notice or the lapse of time, or both) or require any registration, qualification, consent, approval, or filing under any regulation or Order binding on it (other than any required filings under the HSR Act, and (ii) will not (a) conflict with, require any consent or approval (other than as set forth in Section 7.9) under, result (with or without the giving of notice or the lapse of time or both) in the breach of any provision of, constitute a default under, result in the acceleration of the performance of its obligations under, cause or allow for the termination of, require CAS or Holding to obtain any consent, approval or action of, or make any filing with or give any notice to any person as a result or under the terms of, or (b) result (with or without the giving of notice or the lapse of time or both) in the creation of any claim or Lien upon CAS, Holding, the CAS Assets or the CAS Businesses, pursuant to its certificate of incorporation or by-laws, any debt instrument, mortgage, deed of trust, license, permit, franchise, lease, contract, or other instrument or agreement to which such entity or any of its subsidiaries is a party or by which it is bound (other than such instruments the violation(s) of which can be cured at an aggregate immaterial cost or expense to such entity and, with or without being cured, will not prevent such entity from continuing its business in the ordinary course), or Order. 7.9. APPROVALS REQUIRED. Except for any filing required under the HSR Act and except as set forth on SCHEDULE 7.9, no approval, authorization, consent, clearance, order or other action of, or filing (other than notice) with, any person, firm or corporation, or any court, administrative agency or other governmental authority, is required by CAS or Holding in connection with the execution and delivery by it of this Agreement or the performance by it of the transactions described herein. 7.10. TITLE TO PROPERTY AND RELATED MATTERS. On the date hereof, CAS has, and on the Closing Date will have, good and marketable title to all of the CAS Assets (other than assets subject to leases included in SCHEDULE 7.15 or SCHEDULE 7.19), of any kind or character, free and clear of all Liens, except those set forth in SCHEDULE 7.10, and all such assets and properties are reflected on the March 31 Balance Sheet (subject to dispositions or replacements prior to Closing in -10- the ordinary course of business). Except as set forth in such Schedules and except for matters that may arise in the ordinary course of business, CAS's material assets and CAS's use thereof conform in all respects to all applicable Regulations relating to their construction, use and operation, and are in good operating condition and repair, reasonable wear and tear excepted. To the best of the knowledge of CAS and Holding, there does not exist any condition or agreement that materially interferes with the use thereof in the conduct of its business in the ordinary course. CAS has no interest in real property other than as lessee of certain facilities pursuant to leases included on SCHEDULE 7.15 and in leasehold improvements included in the CAS Assets. 7.11. LICENSES; TRADEMARKS; TRADE NAMES. SCHEDULE 7.11 contains a true and complete list and brief description of all licenses, registered trademarks, registered trade names, registered service marks, copyrights, patents or applications for any of the foregoing, and all other proprietary rights required or used in the CAS Business, other than licenses to use "off-the-shelf" commercial software included with the equipment that constitute part of the CAS Assets (none of which licenses are material). Except as listed on such Schedule and such licenses to use "off-the-shelf" commercial software, no license, trademark, trade name, service mark, copyright, is required or used in the CAS Business, and there is no restriction on the transfer thereof. 7.12. [INTENTIONALLY OMITTED] 7.13. FINANCIAL STATEMENTS. The financial statements of CAS attached hereto as SCHEDULE 7.13 (including the audited financial statements of CAS for the year ended December 31, 1997) and the financial statements of Holding included in the SEC Filed Material are (and the financial statements to be delivered pursuant to Section 9.3, when delivered, will be) accurate and complete in all material respects and fairly present (and, to the extent applicable, its predecessor's) financial position of CAS and Holding, as the case may be, as at the dates set forth therein and the results of its operations for the periods reflected therein. All such audited financial statements have been prepared in conformity with GAAP applied on a basis consistent with that of prior periods (except as specifically indicated on such Schedule), and all such unaudited financial statements have been prepared in conformity with GAAP applied on a basis consistent with that of prior periods (except as specifically indicated on such Schedule), except that such unaudited financial statements do not contain footnotes and contain reasonable estimates, subject to adjustment, of accruals, deferrals, and reserves consistent with past practices. Without limiting the generality of the foregoing, such financial statements do not contain any untrue statement of a material fact or omit to state any material fact necessary to make such financial statements not misleading. CAS has always used the fiscal year ending June 30 as its taxable year. No representation or warranty is made with respect to financial projections concerning the operations of CAS which CAS and Holding have previously delivered to the Purchaser. CAS and Holding have maintained their books and records in a manner sufficient to permit preparation of financial statements in accordance with GAAP. 7.14. UNDISCLOSED LIABILITIES. Except as disclosed in the financial statements referred to in Section 7.13, as of the dates referred to in such financial statements CAS has no liabilities or obligations of any kind, whether accrued, absolute, contingent or otherwise, and whether or not required to be disclosed on a balance sheet prepared in conformity with GAAP, and since the date of the last such financial statement, CAS has incurred no such liability or obligation -11- other than (i) as set forth on SCHEDULE 7.14, (ii) in the ordinary course of business and in amounts consistent with historic business operations, and (iii) liabilities which, individually or in the aggregate, are not material to the CAS Business. 7.15. FACILITIES. (i) FACILITIES. CAS does not own any real property. SCHEDULE 7.15 contains a complete and accurate description of the following terms of all Facility Leases: (a) a general description of the leased property, (b) the term thereof, (c) the applicable rent, and (d) any requirements for the consent of third parties to assignments thereof. All Facility Leases are valid, binding and enforceable in accordance with their terms and, are in full force and effect. Except as set forth in SCHEDULE 7.15, no event exists which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default thereunder on the part of CAS which would terminate or cause a material liability under any Facility Leases; and, there exists no occurrence of any event which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default thereunder by any other party. CAS and Holding have delivered true and correct copies of the Facility Leases to the Purchaser prior to the date hereof. (ii) ACTIONS. There are no pending condemnation proceedings, administrative proceedings or other actions against CAS with respect to any of the Facility Leases, or to the knowledge of the Holding or CAS, pending or threatened condemnation proceedings, administrative proceedings or other actions with respect to any of the Facility Leases. (iii) LEASES OR OTHER AGREEMENTS. Except for Facility Leases listed in SCHEDULE 7.15, CAS has not entered into any leases, subleases, licenses, occupancy agreements, options, rights, concessions or other agreements or arrangements written or oral, with respect to the areas of facilities or real property leased to CAS used in connection with the CAS Business. (iv) FACILITY LEASES AND LEASED REAL PROPERTY. With respect to each Facility Lease, CAS enjoys peaceful and undisturbed possession of all the real property it leases, subject to the rights of the fee owners and the terms of the Facility Leases, and CAS has performed all the obligations required to be performed by it though the date hereof. (v) CERTIFICATE OF OCCUPANCY. CAS has received all required approvals of governmental authorities (including permits and a certificate of occupancy or other similar certificate permitting lawful occupancy by CAS of the Leased Facilities) required in connection with CAS's operation of the Leased Facilities. (vi) UTILITIES. All of the Leased Facilities are supplied with utilities (including water, sewage, disposal, electricity and telephone) and other services necessary for the operation of the Leased Facilities as currently operated, and, to the knowledge of CAS and Holding, there is no condition which would result in the termination of any such utility services. (vii) IMPROVEMENTS, FIXTURES AND EQUIPMENT. None of the leasehold improvements is subject to any commitment or other arrangement for their sale or use by an -12- affiliate of Holding or CAS, or any third party that would materially interfere with the use thereof. (viii) NO SPECIAL ASSESSMENT. Neither Holding nor CAS has received notice of any special assessment relating to any of the Leased Facilities or any portion thereof and, to the knowledge of Holding and CAS, there is no pending or threatened special assessment with respect thereto. 7.16. CAS ASSETS. SCHEDULE 1.1 contains an accurate list of each of the CAS Assets with a current book value in excess of $1,000. Except as disclosed on SCHEDULE 7.16, the CAS Assets, include all assets necessary for the conduct of the CAS Business as presently being conducted. 7.17. MATERIAL ADVERSE CHANGE. Except as set forth in SCHEDULE 7.17 or the SEC Filed Material, or as otherwise reflected herein, since March 31, 1998, the CAS Business has been operated in the ordinary course and there has not been: (i) Any actual or, to the knowledge of CAS or Holding, any threatened, material adverse change in the business, condition (financial or otherwise), results of operations, prospects, properties, assets, liabilities, earnings, net worth, or prospects thereof, except for the general effects of present economic conditions or conditions affecting the freight forwarding industry generally; (ii) Any material damage, destruction or casualty loss (whether or not covered by insurance) affecting CAS, the CAS Assets, properties or business; (iii) Any statute, rule, regulation or order adopted (including orders of regulatory authorities with jurisdiction over CAS or its business) that materially and adversely affects CAS, the CAS Assets or the CAS Business, other than any statute, rule, regulation or order affecting the freight forwarding industry in general; (iv) Any increase in, or commitment to increase, the wage, salary, commissions, bonus, employee benefit rate or other compensation payable or to become payable to any of CAS's employees, PROVIDED, HOWEVER, that this paragraph shall not restrict or limit CAS in any way from hiring additional personnel who are required for its operations in the usual course of business consistent with past practices; (v) Any Lien placed on any of the CAS Assets; (vi) Any sale, assignment, transfer, lease, disposition of, or agreement to sell, assign, transfer, lease, or dispose of, any of the CAS Assets, except for dispositions of personal property in the ordinary course of business; (vii) Any acquisition or lease by CAS of any assets or property of any other party except for supplies in the ordinary course of business and acquisitions of personal property in the ordinary course of business, and except for the renewal or extension of the Freight Handling Agreement and the lease of a DC-8 aircraft in connection with CAS's service to and from -13- Indianapolis, Indiana; (viii) Any collective bargaining agreement or commitment by CAS or any liability incurred by CAS to any labor organization or other material change in employee relations; (ix) Any capital expenditure by CAS in excess of $100,000 or outside the ordinary course of business; (x) Any change by CAS in the nature of its business or its methods, principles or practices of accounting; (xi) To the knowledge of CAS or Holding, the loss by CAS of any supplier(s), vendor(s), customer(s) or employee(s), which loss (individually or in the aggregate) has had or is reasonably expected to have a material adverse effect on CAS's financial condition, results of operation, business or prospects; (xii) (a) Other than with respect to existing credit facilities (without amendment or modification thereto), any Indebtedness incurred by CAS with respect to the conduct of the CAS Business in an aggregate principal amount exceeding $1,000,000 (net of any amounts discharged during such period), or (b) any voluntary purchase, cancellation, prepayment or complete or partial discharge in advance of a scheduled payment date with respect to, or waiver of any right of CAS under, any Indebtedness of or owing to CAS with respect to the conduct of the CAS Business. (xiii) Any declaration or payment of any dividend in respect of the capital stock of CAS, or other payment to the stockholders of CAS in their capacity as such. (xiv) Any entering into, any amendment, modification, termination (partial or complete) or granting of a waiver under or giving any consent with respect to (a) any Contract which is required (or had it been in effect on the date hereof would have been required) to be disclosed pursuant to SECTION 7.19 or (b) any License included on SCHEDULE 7.19. (xv) Any other events or conditions of any character specifically related to the business or operations of CAS that may reasonably be expected to have a material adverse effect on CAS or its business or financial condition, except for the general effects of present economic conditions; (xvi) Any agreements or commitments to do any of the foregoing. 7.18. TAX MATTERS. (a) CAS and Holding have filed (or will timely file) all Tax Returns required to be filed by applicable law with respect to the CAS Business or CAS's earnings -14- and assets for periods ending on or prior to the Closing Date. All such Tax Returns were (and, as to Tax Returns not filed as of the date hereof, will be) true, complete and correct and filed on a timely basis. CAS and Holding have paid all Taxes that are due, or claimed or asserted by any taxing authority to be due from Holding and CAS for the periods covered by the Tax Returns filed by CAS or Holding. CAS and Holding have established (and until the Closing Date will maintain) on their books and records reserves adequate to pay all Taxes not yet due and payable in respect of operations and transactions through the Closing Date. There are no Tax Liens upon the assets of CAS except Liens for Taxes not yet due. Holding and CAS have complied (and until the Closing Date will comply) with all applicable laws, rules, and regulations relating to the payment and withholding of Taxes (including withholding and reporting requirements under Code Sections 1441 through 1464, 3401 through 3406, 6041 and 6049 and similar provisions under any other laws) and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper Governmental and Regulatory Authorities all required amounts. No audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes or Tax Returns of Holding or CAS that relate to the CAS Business, or CAS's earnings or assets. Holding and CAS have made available (or, in the case of Tax Returns to be filed on or before the Closing Date, will make available) to the Purchaser complete and accurate copies of all Tax Returns filed by or on behalf of CAS for all taxable years ending on or prior to the Closing Date with respect to the CAS Business, or CAS's earnings and assets. 7.19. AGREEMENTS AND AUTHORIZATIONS. SCHEDULE 7.19 contains a true and complete list and brief description of all written or oral contracts, agreements, mortgages, obligations, understandings, arrangements, restrictions, and other instruments ("Contracts") to which CAS is a party or by which CAS or its assets may be bound involving required payments in any consecutive 12-month period or otherwise representing required annualized costs to CAS of $50,000 or more or representing required aggregate payments by CAS of $50,000 over the term of any such agreement or arrangement (without regard to the amount of annualized payments or -15- costs). SCHEDULE 7.19 also contains a true and complete list and brief description of all governmental licenses, permits, authorizations and material non-governmental licenses, franchises and agency arrangements necessary to operate the CAS Business as heretofore operated ("Licenses"). True and correct copies of all items set forth on such Schedule have been made available to the Purchaser. Except as disclosed on such Schedule, each such Contract and License is valid, binding in full force and effect. No event has occurred which would constitute (whether with or without notice, lapse of time or the happening or occurrence of any other event) a material default by CAS under any of the Contracts or Licenses set forth in such Schedule. CAS is not aware of any material default by the other parties to such Contracts or Licenses. 7.20. COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. Except as set forth on SCHEDULE 7.20: (i) CAS has heretofore complied with and is in compliance with all Regulations which, if not complied with, would materially and adversely affect its business; (ii) CAS has all federal, state, local and foreign governmental licenses and permits necessary for the conduct of its business; and (iii) such licenses and permits are in full force and effect. Neither CAS nor Holding knows of any violations of any such licenses or permits. No proceedings are pending or, to CAS's or Holding's knowledge, threatened to revoke or limit the use of such licenses or permits. 7.21. LITIGATION. Except as set forth in SCHEDULE 7.21, there are no actions, suits, claims, or legal, administrative or arbitration proceedings, or to the knowledge of CAS or Holding, investigations, against Holding or CAS with respect to the CAS Assets or the CAS Business whether at law or in equity, or before or by any federal, state, municipal, local, foreign courts, tribunals, arbitrations or other governmental department, commission, board, bureau, agency or instrumentality, which (i) could reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the closing of any of the transactions contemplated by this Agreement or otherwise result in a material diminution of the benefits contemplated by this Agreement to the Purchaser, or (ii) if determined adversely to CAS or Holding, as applicable, could reasonably be expected to result in (a) any injunction or other equitable relief that would interfere with the CAS Business or (b) individually or in the aggregate in respect of other such actions or proceedings, damages, fines, fees, penalties and other costs by CAS exceeding $50,000. Neither CAS nor Holding know of a threat of, or any fact, circumstances or other basis for, any such action, suit, claim, investigation or proceeding. Except as set forth in SCHEDULE 7.21, CAS is not in default with respect to or subject to any Order and there are no unsatisfied judgements against CAS or the CAS Assets. To the knowledge of CAS and Holding, there is no reasonable likelihood of a determination adverse to CAS in any pending actions, suits, claims, investigations or legal, administrative or arbitration proceedings. 7.22. INSURANCE. Attached hereto as SCHEDULE 7.22 is a list of all insurance policies of CAS setting forth the name of the insurer, a description of the policy, the amount of coverage, the amount of the premium and the expiration date of the policy. All of CAS's insurable properties and assets are insured with reputable and financially sound insurers, and have been consistently insured for the prior five years (or such shorter period as CAS owned such property), for CAS's benefit, under such policies of fire, casualty, and other insurance as are customarily obtained to cover comparable properties and assets by businesses in the region in which such properties and assets are located, in amounts, scope and coverage which are adequate and reasonable in light of existing conditions. Each insurance policy relating to the insurance referred -16- to in this Section is valid and enforceable. CAS has not failed to give any notice or to present any claim under any insurance policy in a due and timely fashion, nor has it permitted a lapse in any of its insurance policies at any time during the prior five years. 7.23. BANKRUPTCY. Neither CAS nor Holding has any knowledge or expectation that any petition for relief will be filed by CAS or Holding or any case commenced against either of them under the Bankruptcy Code or any similar federal or state statute, and neither CAS nor Holding has applied for or consented to the appointment of, or taking of possession by, a receiver, custodian, trustee or liquidator of itself or any of their respective properties or made a general assignment for the benefit of creditors. Neither CAS nor Holding is in default under or in breach of any loan agreement, credit facility, note, lease, or other financing agreement, which will remain outstanding following the Closing. 7.24. EMPLOYEES. Neither CAS nor any of its employees is subject to any labor agreement or collective bargaining agreement, no petition for certification or union election is pending with respect to the employees of CAS, to the knowledge of CAS or Holding, no union or collective bargaining representative has sought such certification or recognition with respect to the employees of CAS at any time during the past three years, and, to the knowledge of CAS or Holding, there has been no agreement or commitment to do or enter into any of the foregoing. Except as set forth on SCHEDULE 7.24, CAS has not entered into any written or oral employment agreement or become obligated under any other document, policy or practice which gives to any person a right to employment or compensation, including severance payments. SCHEDULE 7.24 also includes accurate and complete copies of all written and detailed descriptions of all oral employment arrangements disclosed on such Schedule. To the knowledge of CAS and Holding, all of CAS's employees are authorized by the United States Department of Justice to work in the United States, and CAS has complied with all verification requirements of the United States Department of Justice with respect to the identity of all of CAS's employees and their authorization to work in the United States. CAS is neither in breach of, nor has taken any action which would constitute a breach of, any oral or written agreements or understandings respecting employment. All obligations of CAS, whether arising by operation of law, by contract, by past custom or practice or otherwise, for salaries, vacation, holiday pay, bonuses and other forms of compensation which were payable to its officers, directors or employees as of the date hereof (including all required and due taxes, insurance and withholding thereon) have been paid as of the date hereof. There is no labor strike or labor disturbances pending or threatened against CAS nor is any grievance currently being asserted. CAS is not and has not engaged in any unfair labor practice. There is no unfair labor practice charge or complaint against CAS pending before the National Labor Relations Board or any other domestic or foreign governmental agency and, to the knowledge of CAS or Holding, there are no facts or information that could give rise thereto. CAS's relationship with its employees is good, and neither CAS nor Holding has received any information which would lead it to believe that a material number of CAS's employees will or may cease to be employees of CAS prior to the Closing or will refuse reasonable offers to be employed by the Purchaser following the Closing. 7.25. EMPLOYEE BENEFIT PLANS. (i) Except as set forth on SCHEDULE 7.25, CAS does not sponsor nor is it a party to (a) any employee benefit plan (as defined in Section 3(3) of ERISA), (b) any employee -17- welfare benefit plan (as defined in Section 3(1) of ERISA), (c) any employment contract, written or unwritten or, (d) any other bonus, incentive compensation, deferred compensation, pension, profit sharing, stock purchase, stock option, stock appreciation, phantom stock, leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health, disability, worker compensation, severance or other employee benefit plan, practice, policy or arrangement of any kind, whether written or oral. All such employee benefit plans, employee welfare plans, arrangements and employment contracts which CAS does sponsor or is a party to are hereafter collectively referred to as "Employee Benefit Plans." CAS has not scheduled or agreed upon future increases of benefit levels (or the creation of new benefits) with respect to any Employee Benefit Plan, and no such increases or benefits have been proposed or made the subject of representations to CAS employees under circumstances which make it reasonable to expect that such increases or benefits will be granted. (ii) With respect to each Employee Benefit Plan, CAS has delivered to Purchaser correct and complete copies, including amendments, of the following (to the extent applicable): (i) the current and most recent prior Employee Benefit Plan and contract documents, (including any related trust agreements, service provider agreements, insurance contracts, or agreements with investment managers), (ii) the current and most recent prior Summary Plan Descriptions or similar descriptions of Employee Benefit Plans not subject to ERISA, (iii) the two most recently filed Form 5500s and schedules thereto, (iv) the two most recent IRS determination letters, (v) the two most recent allocation or actuarial reports and (vi) any employee handbook(s) which refer to such Employee Benefit Plan. (iii) The assets of CAS are not subject to any Liens under ERISA or the Internal Revenue Code, and no event has occurred, and no condition exists, which would subject CAS or its assets to a future liability or Lien on account of any Controlled Group Benefit Plan. A Controlled Group Benefit Plan means any Employee Benefit Plan which CAS or any entity which must be considered together with CAS under Internal Revenue Code Section 414(b), (c), (m) or (o) (a "Plan Affiliate"), now maintains or contributes to or ever maintained or contributed to. (iv) No Employee Benefit Plan is or at any time was subject to Title IV of ERISA, nor has CAS ever sponsored or contributed to any plan that at any time was subject to Title IV of ERISA. No event has occurred and there exists no condition or circumstances in connection with any Employee Benefit Plan or any Controlled Group Benefit Plan under which CAS or any Plan Affiliate, directly or indirectly (through any indemnification agreement or otherwise), could reasonably be expected to be subject to any risk of material liability under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of ERISA or Section 4975 of the Code. (v) Each Employee Benefit Plan is, and has at all times been, administered and operated in material compliance with its terms and the Internal Revenue Code, ERISA and all other applicable laws, regulations, orders and prohibited transactions exemptions. Each Employee Benefit Plan which CAS currently sponsors or contributes to can be amended or terminated at any time without liability to CAS. (vi) CAS has performed all obligations required to be performed by it with respect to each Employee Benefit Plan under any law or by the terms of each such Plan. All -18- contributions and other payments required to be made by CAS to any Employee Benefit Plan with respect to any period ending before or at or including the Closing Date have been made or reserves adequate for such contributions or payments have been or will be set aside therefore and have been or will be reflected in financial statements of CAS in accordance with GAAP. There are no material outstanding liabilities of any Employee Benefit Plan (other than routine benefit claims made in the ordinary course). (vii) There are no actions, investigations or claims of any kind (other than routine benefit claims made in the ordinary course), pending or threatened, with respect to any Employee Benefit Plan. There have been no audits or investigations of any Employee Benefit Plan by any governmental agency except as set forth on SCHEDULE 7.25. There are no pending or threatened claims by or on behalf of any Employee Benefit Plan, by any person covered thereby, or otherwise, which allege violations of law and which could reasonably be expected to result in liability on the part of the Purchaser. (viii) Each Employee Benefit Plan that is intended to constitute a qualified plan under Internal Revenue Code Section 401(a) is, and has at all times been, qualified in form and operation under Section 401(a) and is the subject of a favorable determination letter from the IRS. (ix) Except as required by ERISA Sections 601-608, no Employee Benefit Plan provides health, medical or similar benefits to retirees or other former employees or their beneficiaries. (x) The closing of the transactions contemplated by this Agreement will not (i) entitle any current or former employee of CAS to severance pay or any other payment (including parachute payments) from CAS, except as expressly provided in this Agreement, or (ii) accelerate the time of payment or vesting or funding or increase the amount of compensation due any such employee except as expressly provided in this Agreement. (xi) Except as set forth on SCHEDULE 7.25, no loan is outstanding between CAS and any employee of CAS. No employer securities, employer real property or other employer property is included in the assets of any Employee Benefit Plan. (xii) Each Employee Benefit Plan covers only employees (or former employees or beneficiaries) of CAS, so that the transactions contemplated by this Agreement will require no spin-off of assets and liabilities or other division or transfer of rights with respect to any such plan. (xiii) All categories of earned and unpaid bonuses or other similar payments to employees of CAS pursuant to the Employee Benefit Plans, and the date on which such bonuses are due or scheduled to be paid, are set forth on SCHEDULE 7.25, and CAS has made adequate reserve and has sufficient cash resources for payment of such bonuses as and when they become due. 7.26. ENVIRONMENTAL. -19- 7.26.1. CAS has operated its business and maintained its assets (owned or leased) in compliance with all applicable environmental laws and regulations in all material respects, and no order has been issued, claim made or threatened in respect of any environmental matter. All environmental reports directed to or obtained by CAS relating to the CAS Business have been disclosed to the Purchaser. 7.26.2. CAS has obtained all licenses which are required under applicable Environmental Laws in connection with the conduct of the business or the CAS Assets. Each of such licenses is in full force and effect. CAS has conducted the business in compliance in all material respects with the terms and conditions of all such licenses and with any applicable Environmental Law. In addition, except as set forth in SCHEDULE 7.26: (i) No order has been issued, no Environmental Claim has been filed, no penalty has been assessed and no investigation or review is pending or, to the knowledge of CAS or Holding, threatened by any Governmental or Regulatory Authority with respect to any alleged failure by CAS to have any license required under applicable Environmental Laws in connection with the conduct of the business or with respect to any generation, treatment, storage, recycling, transportation, discharge, disposal or Release of any Hazardous Material in connection with the business, and to the knowledge of CAS and Holding there are no facts or circumstances in existence which could reasonably be expected to form the basis for any such order, Environmental Claim, penalty or investigation. (ii) CAS does not own, operate or lease a treatment, storage or disposal facility on any of the real property occupied by CAS requiring a permit under the Resource Conservation and Recovery Act, as amended, or under any other comparable state or local law; and, without limiting the foregoing, (a) no polychlorinated biphenyl is present, (b) no asbestos or asbestos-containing material is present, (c) there are no underground storage tanks or surface impoundments for Hazardous Materials, active or abandoned, and (d) no Hazardous Material has been Released in a quantity reportable under, or in violation of, any Environmental Law or otherwise Released, in the cases of clauses (a) through (d), at, on or under any such real property during any period that CAS owned, operated or leased such property. (iii) No Hazardous Material generated in connection with the operation of the business has been recycled, treated, stored, disposed of or Released by CAS at any location. (iv) No oral or written notification of a Release of a Hazardous Material in connection with the operation of the business has been filed by or on behalf of CAS, and no site or facility now or previously owned, operated or leased by CAS on any of the real property is listed or proposed for listing on the NPL, CERCLIS or any similar state or local list of sites requiring investigation or clean-up. (v) No Liens have arisen under or pursuant to any Environmental Law on any site or facility owned, operated or leased by CAS on any of the real property, and no federal, state or local Governmental or Regulatory Authority action has been taken or, to the knowledge of CAS or Holding, is in process that could subject any such site or facility to -20- such Liens, and CAS would not be required to place any notice or restriction relating to the presence of Hazardous Materials at any such site or facility in any deed to the real property on which such site or facility is located. (vi) There have been no environmental investigations, studies, audits, tests, reviews or other analyses conducted by, or that are in the possession of, CAS in relation to any site or facility now or previously owned, operated or leased by CAS on any of the real property which have not been delivered to the Purchaser prior to the execution of this Agreement. 7.27. BUSINESS RELATIONSHIPS. Except as set forth on SCHEDULE 7.17, to the knowledge of CAS and Holding, CAS's relationships with its suppliers, vendors, representatives and customers is satisfactory, and to the knowledge of CAS and Holding, there is no occurrence which, with or without the giving of notice or the lapse of time or both, would constitute a default under any agreement or arrangement with any such party or would adversely affect CAS's relationship with any such party so as to have a material adverse effect on the business, operations, or condition (financial or otherwise) of CAS, and since March 31, 1998, there have been no material adverse changes in pricing or material adverse changes in volume of business in the aggregate. 7.28. KNOWLEDGE OF ADVERSE CONDITIONS. To the knowledge of CAS and Holding, there are no present or future conditions, state of facts or circumstances which has affected or may in the aggregate have a material adverse effect upon the business or prospects of CAS taken as a whole, except for the general effects of present economic conditions or conditions affecting the freight forwarding industry generally. 7.29. AFFILIATE TRANSACTIONS. Except as disclosed on SCHEDULE 7.29, (i) neither Holding nor any officer, director or Affiliate of CAS or Holding provides, directly or indirectly, any assets, services or facilities used or held for use in connection with the CAS Business, and (ii) the CAS Business does not provide, directly or indirectly, any assets, services or facilities to Holding or any such officer, director or Affiliate. Except as disclosed on SCHEDULE 7.29, each of the transactions listed on such Schedule is engaged in on an arm's-length basis. 7.30. ACCURACY OF REPRESENTATIONS. All representations and warranties with respect to CAS and Holding are true and correct as of the date hereof. This Agreement does not contain, and no statement contained in the Schedules or in any certificate, list or writing furnished by or on behalf of CAS or Holding to the Purchaser pursuant to any provision of this Agreement contains, any untrue statement of a material fact with respect to CAS or Holding or omit to state any material fact with respect to CAS or Holding necessary to make the statements contained herein not misleading. All matters and facts known to CAS or Holding that are material to the CAS Assets and CAS Business (other than the general effects of present economic conditions or conditions affecting the freight forwarding industry generally) have been disclosed to the Purchaser. -21- 8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser represents and warrants to Holding as follows: 8.1. EXISTENCE AND GOOD STANDING. The Purchaser is a corporation duly organized, validly existing, and in good standing under the laws of Delaware, and has the corporate power and authority to own, lease, and operate its properties and carry on its business as now being conducted by it. 8.2. POWER AND AUTHORITY; AUTHORIZATION. The Purchaser has full power and authority to enter into, execute and deliver this Agreement, and to perform each of its obligations hereunder. The execution, delivery, and performance of this Agreement by the Purchaser, in accordance with the terms of this Agreement, have been duly authorized and approved by the board of directors of the Purchaser and no other approval of the Purchaser or its stockholders is required. This Agreement has been, and each of the Exhibits hereto and other documents required hereunder (if applicable) will be, on the Closing Date, duly executed and delivered by or on behalf of the Purchaser and are the legal, valid, and binding obligations of the Purchaser in accordance with their respective terms, subject (as to the enforcement of remedies) to laws of general application relating to bankruptcy, insolvency and the relief of debtors and (as to the availability of equitable remedies) to the discretion of the equity tribunal having jurisdiction. 8.3. NO VIOLATIONS. The execution, delivery, and performance of this Agreement by the Purchaser (i) will not violate (with or without the giving of notice or the lapse of time, or both) or require any registration, qualification, consent, approval, or filing under (except as set forth in Section 8.4), any law, ordinance or regulation binding on it (other than any required filings under the HSR Act and (ii) will not (a) conflict with, require any consent or approval under, result in the breach of any provision of, constitute a default under, result in the acceleration of the performance of its obligations under, cause or allow for the termination of, or (b) result in the creation of any claim or Lien upon any of its properties, assets, or businesses, pursuant to its certificate of incorporation or by-laws, any debt instrument, mortgage, deed of trust, license, permit, franchise, lease, contract, or other instrument or agreement to which the Purchaser is a party or by which it is bound (other than such instruments the violation(s) of which can be cured at an aggregate immaterial cost or expense to such entity and, with or without being cured, will not prevent such entity from continuing its business in the ordinary course), or any judgment, order, writ or decree of any court, arbitrator or governmental agency by which the Purchaser or any of its assets or properties is bound. 8.4. APPROVALS REQUIRED. Except for any filing required under the HSR Act, and as set forth on SCHEDULE 8.4, no approval, authorization, consent, clearance, order or other action of, or filing with, any person, firm or corporation, or any court, administrative agency or other governmental authority, or any governmental or non-governmental trade group, is required by -22- the Purchaser in connection with the execution and delivery by the Purchaser of this Agreement or the performance by the Purchaser of the transactions described herein. 8.5. ACCURACY OF REPRESENTATIONS. All representations and warranties set forth herein with respect to the Purchaser are true and correct as of the date hereof. This Agreement does not contain any untrue statement of a material fact with respect to the Purchaser or omit to state any material fact with respect to the Purchaser necessary to make the statements contained herein not misleading. 9. COVENANTS OF CAS AND HOLDING. CAS and Holding each covenants and agrees as follows: 9.1. Prior to the Closing, it will hold in strict confidence and not disclose to others (except its professional advisors and lenders), and will not use or permit others to use, any data or information obtained from the Purchaser concerning the Purchaser or its business, except as required by law and except to the extent such information can be obtained from public or published information or trade sources. If the transactions contemplated by this Agreement are not concluded, it will (i) return to the Purchaser all such data or information then held by it or its representatives and will continue to maintain such information in strict confidence as set forth above, and (ii) except as required by law or as otherwise provided herein, not disclose to any other party (except its professional advisors and lenders who have a "need to know"), the existence of this Agreement or any letters of intent with respect thereto. It will maintain all negotiations and other information with respect to the transactions contemplated herein in confidence and, except as required by law or as required to comply with federal securities laws, will not make any announcement thereof or disclose such negotiations to any other party other than its professional advisors and lenders. Concurrent with the execution hereof, the parties shall issue the respective announcements attached hereto as EXHIBIT D. If CAS or Holding is advised by its outside legal counsel that it is required by law or by the rules and regulations of the SEC to make any further disclosure, it will first advise the Purchaser of the content of the proposed disclosure, and the time and place that the disclosure will be made, and the parties will endeavor to make such disclosure jointly. This covenant shall survive termination of this Agreement. 9.2. Prior to the Closing Date, CAS will not engage in any practice, take or omit to take any action, or enter into any transaction outside the ordinary course of business. Without limiting the generality of the foregoing, Holding and CAS will: (i) Use commercially reasonable efforts to (a) preserve intact the present business organization and reputation of the CAS Business, (b) keep available (subject to dismissals and retirements in the ordinary course of business consistent with past practice) the services of the CAS employees, (c) maintain the CAS Assets in good working order and condition, ordinary wear and tear excepted, and (d) maintain the good will of customers, suppliers, lenders and other persons to whom CAS sells goods or provides services or with whom CAS otherwise has significant business relationships in connection with the CAS Business. (ii) Except to the extent required by applicable law, (a) cause the CAS -23- Business books and records to be maintained in the usual, regular and ordinary manner, and (b) except in the ordinary course of business, not permit any material change in any pricing, investment, accounting, financial reporting, inventory, credit, allowance or tax practice or policy of CAS that would adversely affect the CAS Business, the CAS Assets or the Assumed Obligations. Nothing contained herein shall require CAS or Holding to disclose to the Purchaser, or allow the Purchaser to have access to, any customer pricing information of CAS. -24- 9.3. FINANCIAL STATEMENTS AND REPORTS; FILINGS. (i) As promptly as practicable and in any event no later than 45 days after the end of each fiscal quarter ending after the date hereof and before the Closing Date (other than the fourth quarter), 90 days after the end of each fiscal year ending after the date hereof and before the Closing Date, or 30 days after the end of each calendar month ending after the date hereof and before the Closing Date, as the case may be, CAS will deliver to the Purchaser true and complete copies of the unaudited balance sheet, and the related unaudited statement of operations, of the CAS Business, as of and for the fiscal year then ended or as of and for the fiscal quarter or month and the portion of the fiscal year then ended, as the case may be, together with the notes, if any, relating thereto, which quarterly and annual financial statements shall be prepared in accordance with GAAP on a basis consistent with the prior financial statements of CAS. Monthly financial statements will be preliminary and may not be in accordance with GAAP. (ii) As promptly as practicable, CAS will deliver to Purchaser true and complete copies of such other financial statements, reports and analyses relating to the CAS Business as may be prepared or received by CAS or as Purchaser may otherwise reasonably request. (iii) As promptly as practicable, CAS will deliver copies of all license applications and other filings made by CAS in connection with the operation of the CAS Business after the date hereof and before the Closing Date with any Governmental or Regulatory Authority (other than routine, recurring filings made in the ordinary course of business consistent with past practice). 9.4. EMPLOYEE MATTERS. Except as may be required by law, prior to the Closing Holding and CAS will refrain from directly or indirectly: (i) Making any representation or promise, oral or written, to any CAS employee concerning any benefit plan, except for statements as to the rights or accrued benefits of any CAS employee under the terms of any benefit plan. (ii) Except as required by an employment agreement set forth on SCHEDULE 7.24 or in conjunction with promotions of employees in the ordinary course of business, making any increase in the salary, wages or other compensation in excess of 5% of any CAS employee's salary or outside of the ordinary course of business consistent with past practice, or any increase in the salary, wages or other compensation of any CAS employee whose annual salary is or, after giving effect to such change, would be $50,000 or more. (iii) Except as required by an employment agreement set forth on SCHEDULE 7.24 or as set forth on SCHEDULE 7.25, adopting, entering into or becoming bound by any benefit plan, employment-related contract or agreement or collective bargaining agreement with respect to the CAS Business or any of the CAS employees, or amending, modifying or terminating (partially or completely) any such benefit plan, employment-related contract or agreement or collective bargaining agreement, except to the extent required by applicable law and, in the event compliance with legal requirements presents options, only to the extent that the option which CAS -25- reasonably believes to be the least costly is chosen. (iv) Except as required by an employment agreement set forth on SCHEDULE 7.24 or as set forth on SCHEDULE 7.25, establishing or modifying any (i) targets, goals, pools or similar provisions in respect of any fiscal year under any benefit plan or any employment-related contract or other compensation arrangement with or for CAS employees, or (ii) salary ranges, increase guidelines or similar provisions in respect of any benefit plan or any employment-related contract or other compensation arrangement with or for CAS employees. (v) Discouraging any employee of the CAS Business from remaining with the CAS Business. 9.5. Prior to the Closing Date, it will continue to operate the CAS Business in the ordinary course of business, and will preserve, and enforce, in the ordinary course of business, all rights with respect thereto, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers and employees. 9.6. Holding and CAS will: (i) on the date hereof, make all filings under the HSR Act with respect to the transactions contemplated hereby (the filing fee with respect thereto to be paid by the Purchaser); (ii) use all commercially reasonable efforts to cooperate with the Purchaser in (a) determining which other filings are required to be made prior to the Closing Date with, and which other consents, approvals, permits or authorizations are required to be obtained prior to the Closing Date from, Governmental or Regulatory Authorities in connection with the execution and delivery of this Agreement and the closing of the transactions contemplated hereby, and (b) timely making all such filings and timely seeking all such consents, approvals, permits or authorizations; (iii) promptly seek all such consents, approvals, permits or authorizations necessary to assign or transfer any Contracts which constitute CAS Assets in accordance herewith; and (iv) use all commercially reasonable efforts to take, or cause to be taken, all other action and do, or cause to be done, all other things necessary, proper or appropriate to close the transactions contemplated by this Agreement. Holding and CAS will provide prompt notification to the Purchaser when any such consent, approval, action, filing or notice referred to in the first sentence of this Section 9.6 is obtained, taken, made or given, as applicable, and will advise the Purchaser of any communications (and, unless precluded by law, provide copies of any such communications that are in writing) with any Governmental or Regulatory Authority or other person regarding any of the transactions contemplated by this Agreement. Holding and CAS will take all commercially reasonable actions necessary or appropriate to cause the prompt expiration or termination of any applicable waiting period under the HSR Act in respect of the transactions contemplated hereby, including complying as promptly as practicable with any requests for additional information and assisting the Purchaser in responding to any such requests for additional information. All out-of-pocket third-party costs and expenses (I.E., but not office or employee overhead expenses) of Holding and CAS in connection with complying with such requests for additional information and assistance to the Purchaser in responding to such requests for additional information shall be subject to the prior approval of and supervision by the Purchaser and shall be paid by the Purchaser or, if paid by Holding or CAS, reimbursed by the Purchaser to Holding or CAS, as the case may be. 9.7. Subject to the provisions of Section 10.5, Holding and CAS jointly and -26- severally undertake to (i) pay all trade liabilities of CAS in accordance with their terms, and (ii) pay, within 15 days following the Closing Date or earlier if required by law or pursuant to any applicable Employee Benefit Plan of CAS, all employee bonus and other compensation arrangements and obligations incurred by CAS prior to the Closing in accordance with CAS's Employee Benefit Plans; PROVIDED, HOWEVER, that to the extent any CAS employee who is hired by the Purchaser (or a subsidiary or Affiliate of the Purchaser) following the Closing elects to retain vacation time accrued while employed by CAS, CAS will pay to the Purchaser the dollar value of such accrued vacation time in accordance with the terms of CAS's Employee Benefit Plans. If, in the reasonable judgement of the Purchaser, the failure to pay any such liability has or may have an adverse impact on the CAS Business after the Closing Date, then, following five days' advance written notice to CAS during which five-day period CAS does not certify to the Purchaser that such liability is legitimately in dispute, the Purchaser may pay such liability and recover the amount so paid from CAS and Holding or by offsetting amounts payable to CAS or Holding pursuant to Section 6.2 hereof. 9.8. CAS and Holding will (a) provide the Purchaser and any person who is considering providing financing to the Purchaser to finance all or any portion of the purchase price (it being understood that the transactions contemplated by this Agreement are not contingent on the Purchaser obtaining any form of financing) and their respective officers, directors, employees, agents, counsel, accountants, financial advisors, consultants and other representatives (collectively, "Representatives") with full access, upon reasonable prior notice and during normal business hours, to the employees and such other officers, employees and agents of CAS and Holding who have any responsibility for the conduct of the CAS Business, to CAS's and Holding's accountants and to the CAS Assets, and (b) furnish the Purchaser and such other persons with all such information and data (including without limitation copies of Contracts, Licenses, Employee Benefit Plans and other CAS Business books and records) concerning the CAS Business, the CAS Assets and the Assumed Obligations as the Purchaser or any of such other persons reasonably may request in connection with such investigation. Nothing contained herein shall require CAS or Holding to disclose to the Purchaser prior to the Closing, or allow the Purchaser to have access to prior to the Closing, any customer pricing information of CAS. 9.9. Prior to the Closing, Holding will, and will cause its subsidiaries to, transfer to CAS all of their respective right, title and interest in and to the assets described on SCHEDULE 7.16. 9.10. If, following the Closing, any customer of CAS claims a refund of amounts previously paid to CAS for services performed prior to the Closing, CAS and Holding undertake to deal with such customer(s) in good faith and to exercise commercially reasonable best efforts to satisfy such customer(s). 9.11. Notwithstanding anything herein to the contrary, the parties hereto acknowledge and agree that at the Closing CAS will not assign to the Purchaser any contract, agreement or other right which by its terms requires the consent of any other party unless such consent has been obtained prior to the Closing. With respect to each such unassigned contract, agreement or right, after the Closing CAS shall continue as the prime contracting party and, if requested by Purchaser shall use its reasonable efforts to obtain the consent of all required parties to -27- the assignment of such contract, agreement or right, but the Purchaser shall be entitled to the benefits of such contract, agreement or right accruing after the Closing to the extent that CAS may provide to the Purchaser with such benefits without violating the terms of such contract, agreement or right. 10. COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees as follows: 10.1. Prior to the Closing, it will hold in strict confidence and not disclose to others (except to rating agencies, its professional advisors and lenders, and as necessary in connection with its 144A or other form of financing, it being understood that the transactions contemplated by this Agreement are not contingent on the Purchaser obtaining any form of financing), and will not use or permit others to use, any data or information obtained from the Amertranz Group concerning the Amertranz Group or its business, except as required by law and except to the extent such information can be obtained from public or published information or trade sources. If the transactions contemplated by this Agreement are not concluded, it will (i) return to the Amertranz Group all such data or information then held by it or its representatives and will continue to maintain such information in strict confidence as set forth above, and (ii) except as required by law or as otherwise provided herein, not disclose to any other party (except its professional advisors and lenders who have a "need to know"), the existence of this Agreement or any letters of intent with respect thereto. It will maintain all negotiations and other information with respect to the transactions contemplated herein in confidence and, except as required by law or by the rules and regulations of the SEC or with the consent of the Amertranz Group, whose consent shall not be unreasonably withheld, will not make any announcement thereof or disclose such negotiations to any other party other than its professional advisors and lenders. Concurrent with the execution hereof, the parties shall issue the respective announcements attached hereto as EXHIBIT D. If the Purchaser is advised by its outside legal counsel that it is required by law or by the rules and regulations of the SEC to make any further disclosure, it will first advise Holding of the content of the proposed disclosure, and the time and place that the disclosure will be made, and the parties will endeavor to make such disclosure jointly. This covenant shall survive termination of this Agreement. Except as specifically superseded herein, the provisions of the confidentiality agreement previously executed by the Purchaser with respect to the transactions contemplated by this Agreement shall survive the execution and termination of this Agreement and the Closing. 10.2. The Purchaser will (i) on the date hereof make all filings and pay the requisite filing fee under the HSR Act with respect to the transactions contemplated hereby; (ii) use all commercially reasonable efforts to cooperate with the Amertranz Group in (a) determining which other filings are required to be made prior to the Closing Date with, and which other consents, approvals, permits or authorizations are required to be obtained prior to the Closing Date from, Governmental or Regulatory Authorities in connection with the execution and delivery of this Agreement and the closing of the transactions contemplated hereby, (b) timely making all filings and timely seeking all such consents, approvals, permits or authorizations, and (c) seeking all such consents, approvals, permits or authorizations necessary to assign or transfer any Contracts which constitute CAS Assets; and (iii) use all commercially reasonable efforts to take, or cause to be taken, all other action and do, or cause to be done, all other things necessary, proper or -28- appropriate to close the transactions contemplated by this Agreement. The Purchaser will take all commercially reasonable actions necessary or appropriate to cause the prompt expiration or termination of any applicable waiting period under the HSR Act in respect of the transactions contemplated hereby, including complying as promptly as practicable with any requests for additional information and assisting the Amertranz Group in responding to any such request for additional information. 10.3. Following the Closing, the Purchaser will pay all of the Assumed Obligations as and when due. 10.4. Following the Closing, the Purchaser will issue invoices for CAS's services performed prior to the Closing and not yet invoiced in the ordinary course of CAS's business. From and after the Closing Date, the Purchaser shall, as agent of CAS, exercise its commercially reasonable efforts to diligently collect all receivables owned by CAS as of the Closing Date pursuant to Section 6 hereof. 10.5. Following the Closing, the Purchaser will prepare as due, in the usual course, all checks or other disbursements, drawn on funds of Holding, CAS or other subsidiary of Holding, from such depositories as designated by Holding prior to or at the Closing, to pay such entities' accounts payable which are not included in the Assumed Obligations. The Purchaser will forward to Holding such checks or other disbursements for handling, together with all supporting documentation. As compensation to the Purchaser for the accounts payable services set forth above, CAS will pay to the Purchaser two percent of all amounts so paid. 10.6. Following the Closing, the Purchaser will cooperate with the Amertranz Group and its representatives and will provide the Amertranz Group and its representatives with all information and access to personnel reasonably requested in connection with the preparation of financial statements (including independent audits) and federal and state tax returns of CAS, Holding, and Holding's other subsidiaries. 10.7. For a period of three months following the Closing, the Purchaser will allow CAS or Holding to use, rent-free, storage space at the 7001 Cessna Drive leased facility. 10.8. For a period of up to three months following the Closing, the Purchaser will prepare as due, in the usual course, all required payroll information with respect to Holding's Target Airfreight, Inc. subsidiary, and transmit such information to the payroll processing service designated by Holding. 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF CAS AND HOLDING. The Amertranz Group's obligation to close the transactions pursuant to this Agreement is contingent on the fulfillment, at or prior to the Closing Date, of each of the following conditions to the reasonable satisfaction of Holding in its judgement (which judgement will not be unreasonably exercised), any of which conditions may be waived in writing, in whole or in part, by Holding: -29- 11.1. The representations and warranties made by or on behalf of the Purchaser contained in this Agreement or in any certificate or document delivered by, or at the direction of, the Purchaser to CAS or Holding pursuant to the provisions hereof shall be true at and as of the time of the Closing as though such representations and warranties were made at and as of such time. 11.2. The Purchaser shall have performed and complied in all material respects with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing. 11.3. The Purchaser shall have delivered to Holding all of the exhibits and schedules required herein to be delivered by the Purchaser, and copies of the documents referred to therein, each duly executed, if required, and each such exhibit, schedule and document shall have been reasonably acceptable to Holding. 11.4. Holding shall have received a certificate signed by the chief executive officer of the Purchaser and dated the Closing Date, to the effect that the conditions specified in Sections 11.1 through 11.3 inclusive have been fulfilled. 11.5. The waiting period applicable to the transactions contemplated hereby under the HSR Act shall have expired or been terminated and all necessary clearances pursuant to the HSR Act shall have been obtained, and there shall be no Order or Regulation restricting enjoining or making illegal the closing of the transactions contemplated under this Agreement. 11.6. Holding, CAS and the Purchaser shall have obtained (i) all required consents for the assignment by CAS to the Purchaser of all of the customer agreements listed on SCHEDULE 7.19, and (ii) the consent or clearance of the required governmental bodies as listed on SCHEDULE 7.9 and SCHEDULE 8.4 for the conclusion of the transactions contemplated by this Agreement. 11.7. Holding shall have received the following: 11.7.1. A certificate from the Secretary of State (or similar office) of the Purchaser's jurisdiction of incorporation, dated at or about the Closing Date, to the effect that the Purchaser is in good standing under the laws of said jurisdiction. 11.7.2. An incumbency certificate for the Purchaser dated at or about the Closing Date. 11.7.3. The opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Purchaser, dated the Closing Date, in the form attached hereto as EXHIBIT E. 11.7.4. The duly executed Assumption Agreement. 11.7.5. The duly executed Escrow Agreement. -30- 12. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER. The Purchaser's obligation to close the transactions pursuant to this Agreement is contingent on the fulfillment, at or prior to the Closing Date, of each of the following conditions to the reasonable satisfaction of the Purchaser in its judgement (which judgement will not be unreasonably exercised), any of which conditions may be waived in writing, in whole or in part, by the Purchaser: 12.1. The representations and warranties by CAS and Holding contained in this Agreement or in any certificate or document delivered by, or at the direction of CAS or Holding to the Purchaser pursuant to the provisions hereof shall be true at and as of the time of the Closing as though such representations and warranties were made at and as of such time. 12.2. CAS and Holding shall have performed and complied in all material respects with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by them prior to or at the Closing. 12.3. CAS or Holding shall have delivered to the Purchaser all of the exhibits and schedules required herein to be delivered by CAS or Holding, and copies of the documents referred to therein, each duly executed, if required, and such exhibits, schedules and documents shall have been reasonably acceptable to the Purchaser. 12.4. All of the items listed on SCHEDULE 7.16 shall have been transferred and assigned to CAS, free and clear of all Liens. 12.5. The Purchaser shall have received a certificate signed by the President of Holding and the Executive Vice President of CAS and dated the Closing Date, to the effect that the conditions specified in Sections 12.1 through 12.4 inclusive have been fulfilled. 12.6. Subject to the provisions of Section 9.11, Holding, CAS and the Purchaser shall have obtained the consent or clearance, in form and substance satisfactory to the Purchaser, of the required governmental bodies and third parties as listed on SCHEDULE 7.9 and SCHEDULE 8.4 for the conclusion of the transactions contemplated by this Agreement and such consents shall not be subject to the satisfaction of any condition that has not been satisfied or waived and shall be in full force and effect; PROVIDED, HOWEVER, that notwithstanding the provisions of Section 9.11, the Purchaser's obligation to close the transactions pursuant to this Agreement is contingent on the Amertranz Group obtaining, prior to the Closing, all required consents for the assignment by CAS to the Purchaser of all of the customer agreements listed on SCHEDULE 7.19. -31- 12.7. The waiting period applicable to the transactions contemplated hereby under the HSR Act shall have expired or been terminated and all necessary clearances pursuant to the HSR Act shall have been obtained, and there shall be no Order or Regulation restricting, enjoining or making illegal the closing of the transactions contemplated under this Agreement which could reasonably be expected to otherwise result in a material diminution of the benefits of the transactions contemplated by this Agreement to the Purchaser, and there shall not be pending or threatened any action or proceeding in, before or by any Governmental or Regulatory Authority which could reasonably be expected to result in the issuance of any such Order or the enactment, promulgation or deemed applicability to the Purchaser or the transactions contemplated by this Agreement of any such Regulation. 12.8. The Purchaser shall have received the following: 12.8.1. No later than 15 days before the Closing Date, CAS's unaudited monthly interim financial statements for the periods April 1, 1998 through the last day of the month ending more than 30 days prior to the Closing Date, each certified by the chief financial officer of Holding and each prepared in accordance with GAAP applied on a consistent basis with prior periods, except that such unaudited financial statements will not contain footnotes and will contain reasonable estimates, subject to adjustment, of accruals, deferrals, and reserves consistent with past practices. 12.8.2. The duly executed Bill of Sale. 12.8.3. Certificates from the Secretary of State of Delaware, dated at or about the Closing Date, to the effect that each of CAS and Holding is in good standing under the laws of the state of Delaware. 12.8.4. An incumbency certificate for each of CAS and Holding dated at or about the Closing Date. 12.8.5. The opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, counsel to CAS and Holding, dated the Closing Date, in the form attached hereto as EXHIBIT F. 12.8.6. The opinion of Potter Anderson & Corroon LLP, special counsel to Amertranz, to the effect that the performance of this Agreement by CAS and Holding is not required to be approved by Holding's shareholders under the General Corporation Law of the State of Delaware. 12.8.7. Subject to the provisions of Section 9.11, for each of the Facility Leases, an estoppel certificate and consent to assignment from the lessor thereunder in form and substance reasonably satisfactory to the Purchaser. 12.8.8. The duly executed Escrow Agreement. 12.8.9. The certificates of the Chief Financial Officer of CAS and -32- the Chief Financial Officer of Holding in form and substance satisfactory to the Purchaser certifying that after giving effect to the transactions contemplated by this Agreement, Holding and CAS will be solvent. 12.9. The employment agreement between the Purchaser (or its subsidiary) and Richard A. Faieta referred to in Section 13.2, shall be in full force and effect, and Richard A. Faieta shall not be in breach thereof. 13. CONCURRENT ACTIONS. The parties intend that concurrent with the execution hereof: 13.1. Holding will obtain the opinion of BT Alex. Brown Incorporated with respect to the fairness, from a financial point of view, of the transaction contemplated by this Agreement to the shareholders of Holding (the "Fairness Opinion"), in form and substance satisfactory to Holding, and deliver a copy thereof to the Purchaser. 13.2. The Purchaser (or its subsidiary) will have entered into an employment agreement with Richard A. Faieta, in form and substance satisfactory to the Purchaser, to be effective as of the Closing Date. 13.3. The parties will make all filings under the HSR Act with respect to the transactions contemplated hereby, and will request early termination of the waiting period under the HSR Act. 14. NON-COMPETE AND NON-SOLICITATION COVENANTS. 14.1. NON-COMPETITION. Holding and CAS undertake that for a period of three years after the Closing Date, neither of them will, and none of their subsidiaries and affiliate companies will, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management operation or control of or be connected as a partner, consultant or otherwise with, any business or organization which directly or indirectly, competes with, or in any way interferes with, the CAS Business as now constituted or the freight and logistics services of the Purchaser and its subsidiaries and affiliates to or from the Caribbean, except that Holding and its subsidiaries and Affiliates may continue to engage in the freight forwarding business between the mainland United States and the Caribbean provided that gross sales revenue for such business does not exceed, in the aggregate for all such entities, $3,000,000 per year, and provided further that for all such permitted Caribbean freight forwarding business engaged in by Holding or its subsidiaries or Affiliates for customers for which Holding or its subsidiaries or Affiliates have not provided Caribbean freight forwarding services during the six months prior -33- to the date hereof, Holding and its subsidiaries and Affiliates shall engage the Purchaser or its subsidiaries or Affiliates to provide such Caribbean freight forwarding services at the lowest rate charged by the Purchaser or its subsidiaries or Affiliates, as applicable, during the prior 30 days for comparable services provided to other freight forwarders other than Emery Worldwide. 14.2. NON-SOLICITATION. Holding and CAS further undertake that for a period of three years after the Closing Date neither of them will, and none of their subsidiaries or affiliates will, either on their own account or jointly with any third party or on behalf of any other person, firm or corporation: (i) directly or indirectly solicit or attempt to solicit the employment of any person or persons who are or were employed in the CAS Business immediately prior to the Closing Date or during the six months immediately preceding the Closing Date; (ii) cause or attempt to cause any supplier to the CAS Business to terminate or materially reduce its services to the Purchaser or any of its Affiliates with respect to Caribbean freight forwarding business; or (iii) disclose (unless otherwise disclosed by others prior thereto, or compelled by judicial or administrative process to disclose) or use any confidential or secret information relating to the CAS Business or any client, customer or supplier of the CAS Business. 14.3. INJUNCTIVE RELIEF AND ENFORCEMENT. In the event of breach by Holding or CAS of the terms of Sections 14.1 and 14.2, the Purchaser shall be entitled to institute legal proceedings to obtain damages for such breach, or to enforce the specific performance of this Agreement and to enjoin Holding or CAS from any further violation of Sections 14.1 and 14.2 and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided at law. Holding and CAS acknowledge, however, that the remedies at law for any breach by either of them of the provisions of Section 14.1 and 14.2 may be inadequate. In addition, in the event the undertakings set forth in Sections 14.1 and 14.2 shall be determined by any court of competent jurisdiction to be unenforceable by reason of extending for too great a period of time or by reason of being too extensive in any other respect, each such agreement shall be interpreted to extend over the maximum period of time for which it may be enforceable and to the maximum extent in all other respects as to which it may be enforceable and enforced as so interpreted, all as determined by such court in such action. 15. INDEMNIFICATION. 15.1. INDEMNIFICATION BY HOLDING AND CAS. Holding and CAS, jointly and severally, hereby agree to indemnify and hold harmless the Purchaser and its shareholders, affiliates, directors, officers, agents and employees (collectively the "Purchaser Indemnitees"), from and against any and all Losses (as hereinafter defined), to the extent such Losses arise out of, result from, or are in connection with: (i) any breach by CAS or Holding of any of the terms of this Agreement, (ii) any breach of any warranty or representation of CAS or Holding made herein or pursuant to this Agreement, or (iii) any failure by CAS or Holding to perform or comply with any of their covenants or obligations under this Agreement, (iv) the operation of the CAS Assets or the CAS Business prior to the Closing, or (v) any obligations of CAS to third parties other than the Assumed Obligations. 15.2. INDEMNIFICATION BY THE PURCHASER. The Purchaser hereby agrees to indemnify and hold harmless CAS and Holding and their respective shareholders, affiliates, directors, -34- officers, agents and employees (collectively "Seller Indemnitees"), from and against any and all Losses, to the extent such Losses arise out of, result from, or are in connection with: (i) any breach by the Purchaser of any of the terms of this Agreement, (ii) any breach of any warranty or representation of the Purchaser made herein or pursuant to this Agreement, (iii) any failure by the Purchaser to perform or comply with any of its covenants or obligations under this Agreement, (iv) the operation of the Purchaser's business, and the operation by the Purchaser of the CAS Assets and the CAS Business after the Closing, or (v) the payment of the Assumed Obligations. 15.3. For purposes of this Agreement, "LOSSES" shall mean the aggregate of any and all payments for claims, liabilities, suits, actions, demands, charges, damages, losses, costs, or expenses (including reasonable attorneys' fees, expert witness fees and court costs) of every kind and nature incurred by the indemnified party, net of all reserves with respect to such item, tax benefits (net of the net tax costs, if any, of the indemnified party from the realization of such indemnification payment), insurance proceeds, proceeds of subrogation and any indemnity, contribution or other similar payment from third parties. Tax benefits will be considered to be realized for purposes of this Section in the year in which an indemnity payment occurs, taking into account the present value of any such tax benefits, and the amount of tax benefits shall be determined by assuming the person entitled to be indemnified is in the maximum applicable foreign, federal, state and local income tax bracket applicable to the indemnitee for the taxable year preceding the taxable year of the indemnitee in which claim for verification is made. 15.4. Except as provided in the sentence next immediately following, no indemnification shall be made to any Purchaser Indemnitee under this Section 15, except to the extent the aggregate amount of Losses by all Purchaser Indemnitees exceeds $500,000 and, similarly, no indemnification shall be made to any Seller Indemnitee under this Section 15 except to the extent the aggregate amount of Losses by all Seller Indemnitees exceeds $500,000 ( such $500,000 amounts are each the "Threshold"); and the maximum liability of any indemnifying party pursuant to all claims for indemnification under this Section and all breaches of this Agreement shall be $7,500,000 in the aggregate (the "Maximum"). The Threshold and Maximum limitations set forth in this Section shall not apply to claims for indemnification for breaches of the representations and warranties set forth in Subsections 7.7, 7.8, 7.9, 7.10, 7.18, 7.24, 7.25, 7.26, 8.2, 8.3 and 8.4, and the covenants set forth in Subsections 9.1., 10.1, 10.3, Section 14, or any obligation of Holding or CAS to the Purchaser under Subsection 9.7. All amounts paid by the Purchaser to Holding or CAS pursuant to Section 22.2.2 shall be credited against amounts payable by the Purchaser to CAS or Holding for indemnification hereunder. 15.5. Whenever any claim for indemnification is made, or any suit or proceeding is instituted, which if meritorious or which if prosecuted successfully would entitle a party to indemnification under this Section 15 (a "Claim"), the person seeking indemnification (the "Indemnitee"), shall promptly notify the party from whom indemnification is sought (the "Indemnitor ") of the Claim and, when known, the facts constituting the basis for such Claim. In the event of any such Claim for indemnification hereunder resulting from or in connection with any Claim by a third party, the notice shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. The Indemnitee shall not settle or compromise any Claim by a third party for which it is entitled to indemnification hereunder without the prior written consent of the Indemnitor , which shall not be unreasonably withheld or delayed; PROVIDED, HOWEVER, that if -35- suit shall have been instituted against the Indemnitee(s) and the Indemnitor(s) shall not have taken control of such suit after notification thereof as provided in Subsection 15.6 of this Agreement, the Indemnitee shall have the right to settle or compromise such claim upon giving notice to the Indemnitor as provided in Subsection 15.6. 15.6. In connection with any Claim which may give rise to indemnification hereunder resulting from or arising out of any Claim (or legal proceeding) by a person other than an Indemnitee, the Indemnitor, at its sole cost and expense, may, upon written notice to the Indemnitee, assume the defense of any such Claim (including legal proceedings in connection therewith) if the Indemnitor acknowledges to the Indemnitee in writing the Indemnitor's obligation to indemnify the Indemnitee with respect to all elements of such Claim. If the Indemnitor assumes the defense of any such Claim (or legal proceeding), the Indemnitor shall select counsel reasonably acceptable to the Indemnitee to conduct the defense of such Claims (or legal proceedings) and at the sole cost and expense of the Indemnitor(s) shall take all steps necessary in the defense or settlement thereof. The Indemnitor(s) shall not consent to a settlement of, or the entry of any judgment arising from, any such Claim (or legal proceeding), without the prior written consent of the Indemnitee, which shall not be unreasonably withheld or delayed. The Indemnitee shall be entitled to participate in (but not control) the defense of any such action, with its own counsel and at its own expense. If the Indemnitor does not assume the defense against any such Claim (or litigation resulting therefrom) within 30 days after the date the Indemnitee notifies the Indemnitor of such Claim: (a) the Indemnitee may defend against such Claim (or litigation) in such manner as it may deem appropriate, including, but not limited to, settling such Claim, after giving notice of the same to the Indemnitor(s), on such terms as the Indemnitee may deem appropriate, and (b) the Indemnitor(s) shall be entitled to participate in (but not control) the defense against such Claim, with its counsel and at its own expense. If the Indemnitor thereafter seek to question the manner in which the Indemnitee defended against such Claim or the amount or nature of any such settlement, the Indemnitor shall have the burden to prove by a preponderance of the evidence thatthe Indemnitee did not defend against or settle such Claim in a reasonably prudent manner. 16. NO BROKERAGE. 16.1. Other than the obligations of the Holding to BT Alex. Brown Incorporated, neither Cas or Holding has incurred any obligation or liability, contingent or otherwise, for brokerage fees, finder's fees, agent's commissions, or the like in connection with this Agreement or the transactions contemplated hereby. Holding agrees to indemnify and hold the Purchaser harmless against and in respect of any such obligation or liability based on agreements, arrangements, or understandings claimed to have been made by Holding or CAS with any third party. 16.2. The Purchaser has not incurred any obligation or liability, contingent or otherwise, for brokerage fees, finder's fees, agent's commissions, or the like in connection with this Agreement or the transactions contemplated hereby. The Purchaser agrees to indemnify and hold CAS and Holding harmless against and in respect of any such obligation or liability based on agreements, arrangements, or understandings claimed to have been made by the Purchaser with any third party. -36- 17. NATURE OF REPRESENTATIONS AND WARRANTIES. All of the parties hereto are executing and carrying out the provisions of this Agreement in reliance on the representations, warranties, covenants and agreements contained in this Agreement or at the closing of the transactions contemplated hereunder, and any investigation that they might have made or any other representations, warranties, covenants, agreements, promises or information, written or oral, made by the other party or any other person shall not be deemed a waiver of any breach of any such representation, warranty, covenant or agreement. 18. NOTICES. All notices, writings and other communications required or permitted to be given pursuant to this Agreement shall be in writing, and if such notices are hand-delivered or faxed, return fax acknowledgement requested, to the address set forth below, they shall be deemed to have been received on the business day so delivered or transmitted; if such notices are transmitted by overnight courier, to the address set forth below, they shall be deemed to have been received on the business day following the date on which so transmitted, provided that any notice, writing or other communication received after 5:00 p.m., Eastern Time, shall be deemed to have been received on the next business day: CAS and Holding: Amertranz Worldwide Holding Corp. 112 East 25th Street Baltimore, Maryland 21218 Fax (410) 338-1105 Attn: Mr. Stuart Hettleman With a copy to: Zelig Robinson, Esquire Hillel Tendler, Esquire Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC 233 East Redwood Street Baltimore, Maryland 21202 Fax (410) 576-4167 The Purchaser: Roger E. Payton GeoLogistics Corporation 13952 Denver West Parkway, Suite 150 Golden, Colorado 80401 Fax (303) 704-4410 -37- With a copy to: Eric H. Schunk, Esquire Milbank, Tweed, Hadley & McCloy 601 South Figueroa Street Los Angeles, California 90017 Fax (213) 629-5063 Any party may change its address for notice or payment purposes by giving notice the other parties as hereinabove provided. 19. EXPENSES. 19.1. Except as otherwise provided herein, each party hereto shall be responsible for and bear all of its own costs and expenses (including the expenses of its representatives) incurred at any time in connection with negotiation, due diligence and closing the transaction described herein. 19.2. Each party hereto shall pay all income taxes and other taxes based on its taxable income which may be required as a result of the transactions contemplated hereby. CAS or Holding will pay any sales, transfer or franchise taxes arising out of the transfer of the CAS Assets hereunder. Holding and CAS shall file all necessary documentation and Returns with respect to such taxes. 20. SURVIVAL. Except as set forth in Section 14 and as otherwise provided herein, the representations, warranties, covenants and agreements herein contained shall survive the execution, and delivery of this Agreement and the closing of the transactions contemplated hereby, and shall continue for a period of two years following the Closing Date, except for breaches of the representations and warranties set forth in Sections 7.7, 7.18, 7.25, 7.26, 8.2 and 8.5, and the covenants set forth in Sections 9.1 and 10.1, which shall survive until the expiration of all applicable statutes of limitation with respect thereto, and the representations and warranties set forth in Section 7.26, which shall survive until the expiration of all applicable statutes of limitation with respect thereto or to derivative claims arising from environmental conditions existing at the time of the Closing. 21. EXCLUSIVITY. 21.1. Until the Closing Date or termination of this Agreement, Holding and CAS will not directly or indirectly, through any representative or otherwise, solicit or entertain offers from, negotiate with or in any manner, encourage, discuss, accept or consider any proposal of any other person relating to the acquisition of the CAS Assets, the CAS Shares or the CAS Business in whole or in part, whether directly or indirectly, through purchase, merger, consolidation, or otherwise. Notwithstanding the above, Holding and CAS may, directly or indirectly, furnish information and access, in each case only in response to unsolicited requests therefor, to any reputable, unaffiliated, third party person, entity or group pursuant to confidentiality -38- agreements, and may participate in discussions and negotiate with such entity or group concerning any merger, sale of the CAS Assets, sale of the CAS Shares or similar transaction involving CAS, if (i) such person, entity or group has submitted an unsolicited, written, bona fide proposal to Holding's Board of Directors relating to any such transaction (an "Alternative Proposal"), (ii) Holding's Board of Directors by a majority vote determines in its good faith judgment, based as to legal matters on the written advice of legal counsel, that failing to take such action would result in a substantial risk of liability for a breach of the Board of Directors' fiduciary duty, and (iii) Holding's Board of Directors shall have determined, after consultation with its legal advisors and after review of a written opinion from its financial advisors, that the terms of such Alternative Proposal are principally superior to the terms set forth in this Agreement and that such Alternative Proposal is reasonably capable of being financed (a "Superior Proposal"). Holding shall provide a copy of any such written proposal to the Purchaser immediately after receipt thereof and shall keep the Purchaser fully informed of the status and details of such Alternative Proposal. 22. TERMINATION OF AGREEMENT. 22.1. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing, by written notice from the party terminating the Agreement to the other party, as follows: 22.1.1. BY MUTUAL CONSENT. By the mutual written consent of Holding and the Purchaser. 22.1.2. BY EITHER PARTY. At any time before the Closing, by Holding or the Purchaser, in the event of a material breach hereof by the non-terminating party if such non-terminating party fails to cure such breach within five business days following written notification thereof by the terminating party. 22.1.3. BY HOLDING. By Holding, if (i) in accordance with Section 21, in the exercise of the good faith judgment of Holding's Board of Directors as to its fiduciary duties to its stockholders imposed by law based on the written opinion of outside counsel, the Board of Directors of Holding authorizes the Company to enter into a binding written agreement covering a transaction that constitutes a Superior Proposal and CAS and Holding provide written notification to the Purchaser in accordance with Section 21, and (ii) the Purchaser, within 10 business days following receipt of CAS's written notification of its intention to enter into a binding agreement for a Superior Proposal, does not make an offer that the Board of Directors of Holding determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the stockholders of Holding as the Superior Proposal, and (iii) CAS and Holding pays the Termination Fee to the Purchaser. 22.2. EFFECT OF TERMINATION AND ABANDONMENT. 22.2.1. If this Agreement is terminated by Holding pursuant to Section 22.1.3, then, within seven days following such termination, the Amertranz Group shall pay to the Purchaser, by wire transfer of immediately available funds, a fee of $2,000,000 (the -39- "Termination Fee"). Holding and CAS each acknowledges that the agreements contained in this Section 22.2.1 are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, the Purchaser would not enter into this Agreement; accordingly, if the Amertranz Group fails to promptly pay the amount due pursuant to this Section, and, in order to obtain such payment, the Purchaser commences a suit which results in a judgment against Holding or CAS for the Termination Fee, the Amertranz Group shall pay to the Purchaser its costs and expenses (including reasonable attorneys' fees) in connection with such suit, together with interest on the amount of the Termination Fee at the rate of 12% per annum from the date the Termination Fee was required to be paid. 22.2.2. In the event of termination of this Agreement pursuant to this Section 22, or if the Closing shall not have occurred on or before the Closing Date, all obligations of the parties hereto shall terminate, except the obligations of the parties set forth in this Section 22.2 and except for the provisions of Sections 9.1, 10.1, 19, 22, 25, 26, 27, and 28. If the Closing shall not have occurred on or before the Closing Date, or in the event of termination of this Agreement for any reason other than pursuant to Sections 22.1.1 or 22.1.3, nothing herein shall prejudice the ability of the non-terminating party from seeking damages from any other party for any willful breach of this Agreement, including reasonable attorneys' fees and the right to pursue any remedy at law or in equity, PROVIDED, HOWEVER, that in the event Holding or CAS is entitled to receive payment for damages pursuant to this Section and such actual damages are finally determined to be less than $1,000,000 exclusive of attorney's fees, the Purchaser shall pay to Holding and CAS the sum of $1,000,000 plus reasonable attorney's fees. 23. EFFECT OF WAIVER. The failure of any party at any time or times to require performance of any provision of this Agreement will in no manner affect the right to enforce the same. The waiver by any party of any breach of any provision of this Agreement will not be construed to be a waiver by any such party of any succeeding breach of that provision or a waiver by such party of any breach of any other provision. 24. SEVERABILITY. The invalidity, illegality or unenforceability of any provision or provisions of this Agreement will not affect any other provision of this Agreement, which will remain in full force and effect, nor will the invalidity, illegality or unenforceability of a portion of any provision of this Agreement affect the balance of such provision. In the event that any one or more of the provisions contained in this Agreement or any portion thereof shall for any reason be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein. -40- 25. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with, the laws of the State of New York without regard to conflict of law principles. 26. ENFORCEMENT. Any suit, action or proceeding with respect to this Agreement, shall be brought in the state and federal courts located in New York. The parties hereto hereby accept the exclusive jurisdiction of those courts, as set forth above, for the purpose of any such suit, action or proceeding. The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection that any of them may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any judgment entered by any court in respect thereof brought as set forth above, and hereby further irrevocably waive any claim that any suit, action or proceeding so brought, has been brought in an inconvenient forum. The parties hereto acknowledge and agree that any party's remedy at law for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and such breach or threatened breach shall be per se deemed as causing irreparable harm to such party. Therefore, in the event of such breach or threatened breach, the parties hereto agree that, in addition to any available remedy at law, including but not limited to monetary damages, an aggrieved party, without posting any bond, shall be entitled to obtain, and the offending party agrees not to oppose the aggrieved party's request for, equitable relief in the form of specific enforcement, temporary restraining order, temporary or permanent injunction, or any other equitable remedy that may then be available to the aggrieved party. 27. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement shall not be assignable by any party hereto except as provided herein or with the prior written consent of the other parties. The Purchaser may assign its rights hereunder to any wholly-owned subsidiary of the Purchaser or in connection with any financing arrangement that the Purchaser or such wholly owned subsidiary may enter into, PROVIDED, that the Purchaser shall remain obligated for all obligations to CAS or Holding hereunder. 28. ENTIRE AGREEMENT; MODIFICATION. This Agreement, which includes all schedules and exhibits hereto, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, superseding, except as otherwise provided herein, all prior negotiations, correspondence, understandings and agreements, between the parties; no amendment or modification of this Agreement shall be binding on the parties unless made in writing and duly executed by all parties. -41- There are no oral or implied agreements and no oral or implied warranties between the parties hereto other than those expressed herein. 29. FURTHER ASSURANCES. Each of the parties hereto agrees to execute, acknowledge, seal and deliver, after the date hereof and after the Closing, such further assurances, instruments and documents and to take such further actions as the other may reasonably request in order to fulfill the intent of this Agreement and the transactions contemplated hereby. 30. COUNTERPARTS. This Agreement may be executed in counterparts, all of which taken together shall constitute one instrument. -42- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. CAS: --- CARIBBEAN AIR SERVICES, INC. By: /s/ Stuart Hettleman ---------------------------------------- Stuart Hettleman Executive Vice President HOLDING: ------- AMERTRANZ WORLDWIDE HOLDING CORP. By: /s/ Stuart Hettleman ---------------------------------------- Stuart Hettleman President THE PURCHASER: ------------- GEOLOGISTICS CORPORATION By: /s/ Ron Jackson ---------------------------------------- Ron Jackson Vice President and General Counsel -43- ASSET PURCHASE AGREEMENT INDEX OF SCHEDULES AND EXHIBITS
Schedule - -------- 1.1 - CAS Assets 1.2 - CAS-D Freight Handling Agreement 1.3 - Freight Handling Agreement 4 - Allocation of Purchase Price 6.1 - CAS Pre-Paid Services 7.6 - CAS and Holding Corporate Documents 7.9 - CAS Approvals 7.10 - Exceptions to Title to CAS Assets 7.11 - CAS Licenses and Marks 7.13 - CAS Financial Statements 7.14 - Post-Financial Statement Date CAS Liabilities 7.15 - CAS Facility Leases 7.16 - Exceptions to CAS Assets 7.17 - Material Adverse Changes to CAS 7.19 - CAS Agreements and Authorizations 7.20 - Exceptions to Compliance with Regulations 7.21 - CAS Litigation 7.22 - CAS Insurance Policies 7.24 - CAS Employment Agreements 7.25 - CAS Employee Benefit Plans and Employee Loans 7.26 - CAS Environmental Exceptions 7.29 - CAS Affiliate Transactions 8.4 - Purchaser Approvals Exhibit - ------- A - Assumption Agreement B - Bill of Sale C - Escrow Agreement D - Press Releases E - Purchaser's Counsel's Opinion F - CAS's and Holding's Counsel's Opinion
THE INFORMATION DISCLOSED ON ANY SCHEDULE IS DEEMED TO BE DISCLOSED ON ALL OTHER RELEVANT SCHEDULES TO THIS AGREEMENT. -44- EX-3.1 3 EXHIBIT 3.1 EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF GEOLOGISTICS CORPORATION (Originally incorporated on February 14, 1996) GEOLOGISTICS CORPORATION, a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: That (i) the name of this corporation when originally incorporated was International Logistics Limited and the name of this corporation is currently GeoLogistics Corporation (hereinafter called the "Company"); (ii) the filing of this Amended and Restated Certificate of Incorporation (this "Restated Certificate") was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware; and (iii) this Restated Certificate restates, integrates and further amends the provisions of the Corporation's Certificate of Incorporation as previously restated, amended or supplemented. That its original Certificate of Incorporation as filed with the Delaware Secretary of State on February 14, 1996, as restated and amended to date, is hereby restated in its entirety as follows: I The name of the Corporation is: GeoLogistics Corporation (hereinafter referred to as the "Company"). II The address of its registered office in the State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle, Delaware. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. III The nature of the business or purpose to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. IV The Company is authorized to issue two classes of stock designated respectively Common Stock (the "Common Stock") and Preferred Stock (the "Preferred Stock"). The total number of shares of Common Stock which the Company shall have authority to issue is Five Million (5,000,000), par value $0.001 per share. The total number of shares of Preferred Stock which the Company shall have authority to issue is One Hundred Thousand (100,000), par value $0.001 per share. The Board of Directors, or any committee of the Board of Directors that is authorized pursuant to the terms of this Certificate, the By-laws and applicable law to act on behalf of the Board of Directors, is expressly vested with authority to issue one or more series of Preferred Stock having such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof that are permitted by law and as shall be stated and expressed in the resolution or resolutions providing for the issue of each such series of stock adopted by the Board of Directors. V The holders of the Common Stock shall be entitled to the payment of dividends when and as declared by the Board of Directors out of funds legally available therefor. VI The Board of Directors shall not be authorized to adopt, amend or repeal the Bylaws of the Company or this Certificate of Incorporation except as set forth in the Bylaws. The holders of Common Stock shall not be authorized to adopt, amend or repeal the Bylaws of the Company or this Certificate of Incorporation except as set forth in the Bylaws. VII If the Company issues any Common Stock or securities convertible into Common Stock, or any right, title or interest therein to any Person, then the Company shall make the offer to sell pursuant to, and otherwise comply with the requirements set forth in this Article VII. Notwithstanding the foregoing, the Company may Transfer Common Stock or securities convertible into Common Stock, and any right, title or interest therein without making the offer to sell as set forth in this Article VII in connection with (i) an Initial Public Offering, (ii) the issuance of shares of Common Stock in connection with the exercise of -2- warrants; (iii) the issuance of shares of Common Stock or securities convertible into Common Stock to effect an acquisition, merger or consolidations for consideration other than cash; (iv) the issuance of Securities to certain employees, executive officers and directors of the Company pursuant to any stock option plan approved by the Board of Directors; and (v) the issuance of Securities to any employee, director or officer of the Company or any of its subsidiaries. Notwithstanding the foregoing, any rights or obligations pursuant to this Article VII shall terminate no later than the date of an Initial Public Offering. The rights in this Article VII shall not inure to the benefit of the Warrantholder (as defined below). A. COMPANY TRANSFER NOTICE. If the Company desires in good faith to Transfer Common Stock or securities convertible into Common Stock, the Company shall deliver a written notice of the proposed Transfer (the"COMPANY TRANSFER NOTICE") to each stockholder that in the reasonable judgment of the Company is an Accredited Investor, or who can provide the Company with an opinion of counsel, reasonably satisfactory in form and substance to the Company, that the Company Transfer Securities (as defined below) may be sold to such stockholder without registration under the Securities Act (each an "ACCREDITED OFFEREE"). The Company Transfer Notice shall contain a description of the proposed transaction and the terms thereof including the number of Securities and type of Securities proposed to be transferred (collectively, the "COMPANY TRANSFER SECURITIES"), the name of each person to whom or in favor of whom the proposed Transfer is to be made (the "COMPANY TRANSFEREE"), and a description of the consideration to be received by the Company upon Transfer of the Company Transfer Securities. The Company Transfer Notice shall be accompanied by a copy of the offer to issue Securities to any Person (for purposes of this Article VII, an executed letter of intent stating the terms of such offer, or incorporating by reference a separate summary of terms shall be deemed a written offer). On a day which is not earlier than the ten (10) days following delivery of the Company Transfer Notice and after having received the requisite approval from the Board of Directors, the Company may issue the Company Transfer Securities to the Company Transferee on the terms set forth in the Company Transfer Notice. B. TERMS OF OFFER. Upon completion of the issuance of the Company Transfer Securities referred to in SUBSECTION (A) above, the Company shall deliver to each stockholder a written offer to sell (the "OFFER TO SELL") a Pro Rata portion of an equivalent number of the Company Transfer Securities based upon such stockholder's holdings of Securities other than Preferred Stock. The Offer to Sell shall be on the same terms and conditions, and shall be for cash. If the consideration -3- described in the Company Transfer Notice is for something other than cash, the purchase price paid by each stockholder for shares purchased pursuant to this SUBSECTION (B) shall be in cash at the Trading Price (or if no trading price is available, then the Fair Market Value) of such Securities determined as of the issue date of the Company Transfer Securities. C. ACCEPTANCE OF OFFER. Within thirty (30) days after receipt of an Offer to Sell, any Accredited Offeree may, by written notice delivered to the Company, accept the Offer to Sell in whole or in part. D. TRANSFER OF SHARES. Transfers of Securities pursuant to offers made and accepted in accordance with this Article VII or to a Company Transferee shall occur simultaneously on a Business Day not more than thirty (30) days after the last date on which any offer made in accordance with this Article VII could have been accepted. E. DEFINITIONS. For the purpose of this Article VII capitalized terms not otherwise defined in this Article VII shall have the following meanings assigned to them: "ACCREDITED INVESTOR" shall have the meaning set forth for such term in Regulation D under the Securities Act. "BUSINESS DAY" shall mean a day other than Saturday, Sunday or any other day on which banks located in the State of California are authorized or obligated to close. "FAIR MARKET VALUE" shall mean the fair market value of the Company's Common Stock (or other securities if the context of untraded securities distributed in connection with a Qualified Sale) as determined on a fully-distributed basis without regard to liquidity or size relative to the number of shares outstanding; PROVIDED, that such valuation (x) be performed by a nationally recognized investment banking, valuation or appraisal firm paid for by the Company and (y) shall ascribe value to warrants as the amount, if any, by which the value of the Common Stock underlying the warrant shall exceed the aggregate exercise price related thereto. "INITIAL PUBLIC OFFERING" means the first underwritten public offering of Common Stock by the company pursuant to a registration of shares under the Securities Act on a Form S-1 Registration Statement (or equivalent or successor form). "PERSON" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated -4- organization or government or agency or political subdivision thereof. "PRO RATA" shall mean, with respect to any offer of shares of Common Stock or securities exercisable or convertible into shares of Common Stock, an offer based on the relative percentages of Securities then held by or issuable to all of the stockholders to whom such offer is made. "QUALIFIED SALE" shall mean (i) any sale of all or substantially all of the assets of the Company or (ii) any sale, merger or liquidation of the Company with or into any other entity whereby at least a majority of the voting stock or other voting interests of such surviving entity shall be owned or controlled by a person other than a stockholder. "SECURITIES" shall mean the shares of Common Stock and any securities convertible or exercisable into shares of Common Stock. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "TRADING PRICE" means the trading price for each trading day: (a) if the Common Stock is traded on a national securities exchange, its last reported sale price on the preceding Business Day on such national securities exchange or, if there was no sale on that day, the last reported sale price on such national securities exchange on the next preceding Business Day on which there was a sale, all as made available over the Consolidated Last Sale Reporting System of the CTA Plan (the "CLSRS") or, if the Common Stock is not then eligible for reporting over the CLSRS, its last reported sale price on the preceding Business Day on such national securities exchange or, if there was no sale on that day, on the next preceding Business Day on which there was a sale on such exchange or (b) if the principal market for the Common Stock is the over-the-counter market, but the Common Stock is not then eligible for reporting over the CLSRS, but the Common Stock is quoted on the National Association of Securities Dealers Automated Quotations System ("NASDAQ"), the last sale price reported on NASDAQ on the preceding Business Day or, if the Common Stock is an issue for which last sale prices are not reported on NASDAQ, the closing bid quotation on such day, but in each of the next preceding two cases, if the relevant NASDAQ price or quotation did not exist on such day, then the price or quotation on the next preceding Business Day in which there was such a price or quotation. "TRANSFER" shall mean the issuance, sale, assignment, transfer, giving away, or disposal in any way of any Securities. -5- "WARRANTHOLDER" shall mean the holder (or any successors in interest thereto) of those certain warrants to purchase Common Stock by and between the Company and each of William E. Myers, Jr., Brian E. Sanderson, David W.M. Harvey, William Kidd, Kurt Kamm and Edward Mandell, issued and outstanding as of July 10, 1998, which is exercisable into 88,219 shares of Common Stock; PROVIDED, HOWEVER, that upon the full exercise of all, but not less than all, of the shares of Common Stock underlying such warrants, such holder (or any successors in interest thereto) shall not be deemed a "Warrantholder" for purposes of this Article VII. VIII If an investment opportunity for the Company is presented to the Board of Directors and such investment opportunity is not approved within a reasonable time by the Board of Directors in accordance with the terms and provisions of the By-Laws, then any non-employee stockholder or director of the Company may pursue, either alone or in concert with other parties, such investment opportunity independently of the Company and shall be permitted to manage such investment without regard to the potential impact, competitive or otherwise, on the Company, and such stockholder or director shall have no liability to the Company or its stockholders for such actions or any actions in connection therewith, including sharing trade secrets or other confidential information. IX Subject to Article VIII, a director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after the date of the filing of this Certificate to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. No repeal or modification of this Article IX shall apply to or have any effect on the liability or alleged liability of any director of the Company for or with respect to any acts or -6- omissions of such director occurring prior to such repeal or modification. X To the fullest extent authorized by law, the Board of Directors of the Company, acting on behalf of the Company, shall indemnify or advance costs of defense, or commit the Company to indemnify or advance costs of defense in the future, to any person who is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise (including an action, suit or proceeding by or in the right of the Company) by reason of the fact that the person is or was a director, officer, employee or agent of the Company or a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect to any employee benefit plan of the Company, or serves or served at the request of the Company as a director, officer, partner, trustee, agent or employee, or fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. This Article X shall not be deemed exclusive of any other provision for indemnification of directors, officers fiduciaries, employees or agents that may be included in any statute, bylaw, resolution of shareholders or directors, agreement or otherwise, either as to action in any official capacity or action in another capacity while holding office. -7- IN WITNESS WHEREOF, GeoLogistics Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by Gary S. Holter, its Vice President and Assistant Secretary, this 10th day of July, 1998. /s/ Gary S. Holter ------------------------- Gary S. Holter EX-3.2 4 EXHIBIT 3.2 EXHIBIT 3.2 CERTIFICATE OF DESIGNATION of SERIES A PARTICIPATING PREFERRED STOCK of GEOLOGISTICS CORPORATION Pursuant to Section 151 of the General Corporation Law of the State of Delaware GeoLogistics Corporation, a Delaware corporation (the "CORPORATION"), certifies that pursuant to the authority contained in its Amended and Restated Certificate of Incorporation and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Executive Committee of its Board of Directors has adopted the following resolution creating a series of preferred stock, par value $0.001 per share, designated as Series A Participating Preferred Stock: RESOLVED, that a series of the class of authorized Preferred Stock, par value $0.001 per share, of the Corporation be hereby created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: 1. DESIGNATION AND AMOUNTS. The shares of such series shall be designated as the "Series A Participating Preferred Stock" (the "PREFERRED STOCK") and the number of shares initially constituting such series shall be fifteen thousand (15,000), which number may be increased to the extent required to satisfy the provisions of Section 5 of the Fourth Amended and Restated Stockholders Agreement, dated as of July 10, 1998, by and among the Corporation and the stockholders listed therein, or decreased by the board of directors or any committee thereof authorized to act on behalf of the board of directors of the Corporation ("BOARD OF DIRECTORS") without a vote of the stockholders; PROVIDED, HOWEVER, that such number may not be decreased below the number of then currently outstanding shares of Preferred Stock. The Preferred Stock shall rank senior to the Common Stock, $0.001 par value (the "COMMON STOCK"), of the Corporation and any other series of capital stock of the Corporation ranking junior as to dividends and as to liquidation rights to the Preferred Stock ("JUNIOR STOCK") with respect to both the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up. 2. DIVIDENDS; RESTRICTED PAYMENTS. -2- (a) The holders of shares of the Preferred Stock will be entitled to the payment of dividends in respect of such shares (each, a "PREFERRED STOCK DIVIDEND") when, as and if declared by the Board of Directors out of funds legally available therefor, at the quarterly rate of Thirty Dollars ($30.00) per share, if declared by the Board of Directors on or prior to the applicable Dividend Payment Date (as defined below) and paid in cash on such Dividend Payment Date, or at an accrued quarterly rate of Thirty Five Dollars ($35.00) per share if not so declared by the Board of Directors or if paid in cash after the Dividend Payment Date to which such dividend related and interest shall accrue on said Thirty Five Dollars ($35.00) per share at a rate of fourteen percent (14%) per annum (unless a Trigger Event (as defined below) has occurred, at which time interest thereon shall accrue at a rate of eighteen percent (18%) per annum) from the Dividend Payment Date to which such dividend related; PROVIDED, HOWEVER, that in the event that a Trigger Event has occurred but all of the issued and outstanding shares of the Preferred Stock have not yet been redeemed in full pursuant to SECTION 4 below, the Preferred Stock Dividend shall increase to Forty Dollars ($40.00) per share, if declared by the Board of Directors on or prior to the applicable Dividend Payment Date and paid in cash on the applicable Dividend Payment Date, or at an accrued quarterly rate of Forty Five Dollars ($45.00) per share if (x) not declared by the Board of Directors on or prior to the applicable Dividend Payment Date or paid in cash after the applicable Dividend Payment Date or (y) the Company is prohibited by the Limiting Factors (as defined below) from effectuating a redemption upon the occurrence of a Trigger Event and, in each case, interest on said Forty Five Dollars ($45.00) per share shall accrue at a rate of eighteen percent (18%) per annum from the Dividend Payment Date to which such dividend related. Dividends and interest accrued thereon, if declared by the Board of Directors, shall be payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year (each a "DIVIDEND PAYMENT DATE"), commencing October 15, 1998 (except that if any such date is not a Business Day (as defined below), then such dividend and interest shall be payable on the next succeeding day that is a Business Day), to holders of record of Preferred Stock as they appear on the stock transfer books of the Corporation on such record dates as are fixed by the Board of Directors, which record dates shall not more be than 60 nor less than 10 days preceding the payment dates for such dividends. Any amounts of cash paid by the Corporation to the holders of the Preferred Stock pursuant to this SECTION 2(a) shall first be credited to accrued and unpaid Preferred Stock Dividends, if any, of Forty Five Dollars ($45.00) in cash per share and interest on said Forty Five Dollars ($45.00) per share accruing at a rate of eighteen percent (18%) per annum, then to accrued and unpaid Preferred Stock Dividends, if any, of Forty Dollars ($40.00) in cash per share, then to accrued and unpaid Preferred Stock Dividends, if any, of Thirty Five Dollars ($35.00) in cash per share and interest on said Thirty Five Dollars ($35.00) per share accruing at a rate of eighteen percent (18%) per annum, then to accrued and unpaid Preferred Stock Dividends, if any, of Thirty Five Dollars ($35.00) in cash per share and interest on said Thirty Five Dollars ($35.00) per share accruing at a rate of fourteen percent (14%) per annum, and then to accrued and unpaid Preferred Stock Dividends of Thirty Dollars ($30.00) in cash per share. Dividends on each share of Preferred Stock shall accrue and be fully cumulative (whether or not declared) from the date of issuance of such shares and interest shall be compounded annually and shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. References herein to interest accruals are not intended to create any obligation to pay dividends except as and if declared by -3- the Board of Directors and such references are used for convenience to calculate the increase in accrued dividends upon the occurrence of events described herein. Each share of Preferred Stock shall be entitled to share ratably with each other share of Preferred Stock in such dividends as may be paid at such time and in such amounts as the Board of Directors may from time to time determine. The amount of dividends payable for the initial dividend period and any period shorter than a full quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30-day months. In addition to the full cumulative dividend on such Preferred Stock, the holders of Preferred Stock shall be entitled to participate PARI PASSU in all dividends declared on and distributions made with respect to the Common Stock, whether such Common Stock dividends or distributions are payable in cash, assets, property or stock, such that each holder of Preferred Stock shall receive with respect to each share of Preferred Stock held by such holder an amount of cash or distributions equal to dividends, assets, property or stock that such holder would have received with respect to ten (10) shares of Common Stock (adjusted on a PRO RATA basis for any recapitalization of the Common Stock, including stock splits, reverse stock splits, subdivisions, combinations, reclassifications or issuances of rights or warrants to holders of the Common Stock entitling them to purchase shares of the Common Stock at less than the current market value ("RECAPITALIZATION")) if such shares of Common Stock were issued and outstanding and held by such holder on the record date with respect to such Common Stock dividend or distribution. All such dividends and distributions with respect to Preferred Stock shall be made in the same form as dividends on or distributions with respect to Common Stock, whether cash, assets, stock or property. As used herein, the term "TRIGGER EVENT" shall mean the occurrence of any of the following events: (i) the sale of all or substantially all of the assets of the Corporation, (ii) any merger or consolidation of the Corporation with or into another person, corporation, limited liability company, general partnership, limited partnership, proprietorship, trust or other business organization ("PERSON") or any merger of another Person with or into the Corporation in which the stockholders of the Corporation immediately prior to such merger or consolidation do not hold a majority of the equity interests of the Person after such merger or consolidation, (iii) the closing of an underwritten public offering pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, registering the offer and sale of Common Stock for the account of the Corporation resulting in gross cash proceeds to the Corporation of at least Thirty Million Dollars ($30,000,000), (iv) any breach by the Corporation of any of the terms and conditions set forth in this Certificate of Designation, the Amended and Restated Certificate of Incorporation or Bylaws of the Corporation relating to the Preferred Stock, or the representations, warranties or covenants contained in the Preferred Stock Purchase Agreement, dated as of July 13, 1998, by and among the Corporation and the initial holders of the Preferred Stock, (v) the Corporation files a voluntary petition in bankruptcy or has an involuntary petition filed against it which is not discharged within sixty (60) days after the date of the filing, or is insolvent or in receivership, or (vi) the Corporation is, as of any Dividend Payment Date, permitted under (A) all applicable laws, statutes, rules, regulations, orders or other pronouncements, including judicial interpretations thereof, (B) the terms and conditions of the Indenture, dated October 29, 1997, by and among the Corporation, certain guarantors and First Trust National Association, as trustee, as may be amended or supplemented from time to time (the "INDENTURE"), and (C) the terms and conditions of any agreement to which the Corporation is a party (the items listed in clauses (A), (B) and (C) are collectively referred to -4- as the "LIMITING FACTORS"), to pay some or all of the dividends on the Preferred Stock in cash on the Dividend Payment Date for such payment (or to redeem for cash some or all of the shares of the issued and outstanding Preferred Stock), but for any reason whatsoever fails to pay such dividends in cash (or redeem for cash such shares of the issued and outstanding Preferred Stock) to the maximum extent permitted by the most restrictive of any of the Limiting Factors. As used herein, the term "BUSINESS DAY" shall mean any day which is not a Saturday or a Sunday or a public holiday or a day on which banks are required or permitted to close under the laws of the State of New York or Colorado. (b) So long as any shares of Preferred Stock shall be outstanding, the Corporation shall not, (i) without the prior approval of the holders at least eighty percent (80%) of the issued and outstanding shares of the Preferred Stock, voting as a separate class, and of the Board of Directors, and (ii) unless full payment for all accrued but unpaid dividends with respect to the Preferred Stock shall have been made in cash, (A) declare or pay or set apart for payment any dividend or other distribution upon any Common Stock or Junior Stock, or (B) purchase, redeem or otherwise acquire any Junior Stock for any consideration (or make any payment to or available for a sinking fund for the redemption or other redemption or repurchase of any shares of such stock) other than, as permitted under the terms and conditions of the Indenture and any other agreement to which the Corporation is a party, purchases, redemptions or other acquisitions of Junior Stock from directors, officers or employees of the Corporation or its subsidiaries pursuant to the terms of any employee benefit plan or employment or other agreement. The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under this SECTION 2(b), purchase or otherwise acquire such shares at such time and in such manner. (c) Any reference to "DISTRIBUTION" contained in this SECTION 2 shall not be deemed to include any distribution made in connection with any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. -5- 3. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Preferred Stock shall be entitled to receive for each share of Preferred Stock out of the assets of the Corporation following distributions to any series of preferred stock that is entitled pursuant to the terms thereof to receive distributions upon liquidation, dissolution or winding up of the Corporation prior to distributions to be made to the Preferred Stock pursuant to the terms hereof, whether such assets are stated capital or surplus of any nature, the sum of (a) the product of (i) the sum of (A) an amount equal to One Thousand Dollars ($1,000.00) per share of Preferred Stock (the "LIQUIDATION PREFERENCE"), PLUS (B) an amount in cash, or, if applicable, other assets, property or stock, equal to the dividends accrued and unpaid thereon to the date of final distribution to such holders, whether or not declared, with interest accrued thereon pursuant to SECTION 2(a) above, and (ii) the following liquidation premium based on a liquidation, dissolution or winding up of the Corporation during the twelve (12) month period commencing on July 16 of the period set forth below, PLUS (b) either, at the option of the Corporation, (i) ten (10) shares of Common Stock (adjusted on a PRO RATA basis for any Recapitalization) or (ii) the amount of the Fair Market Value (as defined in SECTION 4(c) below) of ten (10) shares of Common Stock (calculated as of the day prior to such liquidation, dissolution or winding up of the Corporation and before any adjustment to the Fair Market Value because of this clause (b), but adjusted on a PRO RATA basis for any Recapitalization) as of the date of such distribution, before any payment shall be made or any assets distributed to the holders of any Junior Stock:
Period Liquidation Premium ------ ------------------- 1998 100% 1999 100% 2000 110% 2001 108% 2002 106% 2003 104% 2004 102% 2005 and thereafter 100%
In the event the assets of the Corporation available for distribution to stockholders upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full the amounts payable with respect to the Preferred Stock, the holders of the Preferred Stock shall receive a distribution of assets of the Corporation in proportion to the full respective preferential amounts to which they are entitled (but only to the extent of such preferential amounts). Neither a merger, consolidation, or other business combination of the Corporation with or into another corporation or other entity nor a sale or transfer of all or part of the Corporation's assets for cash, securities or other property shall be considered a liquidation, dissolution or winding up of the Corporation for purposes of this SECTION 3 (unless in connection therewith the liquidation of the Corporation is specifically approved). No interest shall accrue on any payment upon liquidation after the date thereof. -6- 4. REDEMPTIONS. (a) OPTIONAL REDEMPTION OF PREFERRED STOCK. The Corporation shall have the right to redeem the Preferred Stock, in whole or in part on a PRO RATA basis from the holders of such Preferred Stock, at the option of the Corporation, at any time by the payment of the Redemption Price (as defined in SECTION 4(b)) in cash. (b) REDEMPTION PRICE. For each share of Preferred Stock which is to be redeemed by the Corporation at any time and for any reason in a redemption pursuant to this SECTION 4, the Corporation shall become obligated to the holder of such share of Preferred Stock on the Redemption Date (as defined below) to pay to such holder the Redemption Price. The "REDEMPTION PRICE" shall mean that in the event that the Corporation elects to redeem the Preferred Stock during the twelve (12) month period commencing on July 16, of the year set forth below, the Corporation shall pay the holders of such shares an amount in cash equal to the Liquidation Preference (together with any accrued but unpaid dividends (collectively, the "CLAIM AMOUNT")) MULTIPLIED by the following redemption premium (expressed as a percentage of the Claim Amount) PLUS either, at the Corporation's option, (i) ten (10) shares of the Common Stock (adjusted on a PRO RATA basis for any Recapitalization) or (ii) the amount of cash equal to ten (10) shares of the Common Stock (calculated as of the day prior to such redemption and before any adjustment to the Fair Market Value because of these clauses (i) and (ii), but adjusted on a PRO RATA basis for any Recapitalization) valued at Fair Market Value as of the date of such redemption:
Period Redemption Premium ------ ------------------ 1998 100% 1999 100% 2000 110% 2001 108% 2002 106% 2003 104% 2004 102% 2005 and thereafter 100%
The term "FAIR MARKET VALUE" shall mean (a) if the Common Stock is not listed and regularly traded on a national exchange or automated quotation system, the value of the Common Stock as determined in good faith by the Board of Directors, or (b) if the Common Stock is listed and regularly trades on a national exchange or automated quotation system, the last reported sale price for the immediately preceding trading day. (c) REDEEMED OR OTHERWISE ACQUIRED SHARES NOT TO BE REISSUED. Any Preferred Stock redeemed pursuant to this SECTION 4 or otherwise acquired by the Corporation in any manner whatsoever shall not under any circumstances be reissued, sold or transferred by the Corporation. -7- (d) NOTICE OF REDEMPTION. Notice of any redemption of the Preferred Stock (the "NOTICE OF REDEMPTION") specifying the date of redemption (the "REDEMPTION DATE"), the time and place of redemption and the redemption price shall be mailed by certified or registered mail, return receipt requested, at the address for such holder shown on the Corporation's records on or before the date on which such redemption is to be made, with respect to the Preferred Stock; PROVIDED, HOWEVER, that in no event shall any redemption of Preferred Stock occur later than ten (10) Business Days following the date of the Notice of Redemption. Upon mailing any Notice of Redemption, the Corporation shall become obligated to redeem at the time of redemption specified therein all Preferred Stock therein specified and all funds necessary for such redemption shall be set aside by the Corporation, separate and apart from its other funds, in trust for the account of the holders of shares of Preferred Stock to be so redeemed. (e) DEPOSIT OF REDEMPTION PRICE. On or before any Redemption Date with respect to the Preferred Stock, the Corporation shall deposit the amount of the Redemption Price thereof with a bank or trust company having an office in the City of New York, designated in such Notice of Redemption, irrevocably in trust for the benefit of the holder of such share of Preferred Stock and thereafter such share shall be deemed to have been redeemed on the Redemption Date so specified, whether or not the certificate for such share of Preferred Stock shall be surrendered for redemption and canceled. Upon surrender to the Corporation by the holder of such share of Preferred Stock of the certificate representing such Preferred Stock, the Corporation shall immediately pay the Redemption Price to such holder. 5. VOTING RIGHTS. Except as may be otherwise provided by law, no holder of Preferred Stock shall have any voting rights nor shall such holder be entitled to notice of any meeting of stockholders of the Common Stock. 6. RESTRICTIONS. So long as any Preferred Stock shall remain issued and outstanding, the Corporation shall not, without the prior written approval of the holders of at least eighty percent (80%) of the issued and outstanding shares of Preferred Stock or the prior written approval of the Board of Directors as authorized by the holders of at least eighty percent (80%) of the issued and outstanding shares of Preferred Stock, create any other class or type of capital stock of the Corporation ranking equal or senior to the Preferred Stock as to dividends, liquidation rights or any other rights or preferences. 7. NONASSESSABLE SHARES. The Preferred Stock shall be nonassessable. 8. REGISTRATION; TRANSFER TAXES. The Corporation shall keep at its principal office (or such other place as the Corporation reasonably designates) a register for the registration of Preferred Stock. Upon the surrender of any certificate representing Preferred Stock at such place, the Corporation shall, at the request of the registered holder of such certificate, execute and deliver a new certificate or certificates in exchange therefor representing in the aggregate the number of Preferred Stock represented by the surrendered certificate (and the Corporation forthwith shall cancel such surrendered certificate), subject to the requirements of applicable -8- securities laws and the restrictions set forth in any applicable stockholders agreement. Each such new certificate shall be registered in such name and shall represent such number of Preferred Stock as shall be requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate. The issuance of new certificates shall be made without charge to the holders of the surrendered certificates for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such issuance, provided that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of (i) the holder of the surrendered certificate or (ii) any institutional affiliate of such holder. 9. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the Corporation of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing one or more shares of Preferred Stock and, in the case of loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the registered holder is a financial institution, its own agreement of indemnity shall be satisfactory), or, in the case of mutilation, upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of Preferred Stock represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. 10. AMENDMENT AND WAIVER. The Corporation shall not amend, alter, change, modify, repeal or waive any provision in this Certificate of Designation or the Amended and Restated Certificate of Incorporation or Bylaws of the Corporation to the extent that such amendment, alteration, modification, change, repeal or waiver of the Amended and Restated Certificate of Incorporation or Bylaws of the Corporation shall in any way adversely affect any of the Preferred Stock or any of the legal rights and privileges of the holders of the Preferred Stock without the prior written approval of the holders of Preferred Stock representing at least eighty percent (80%) of the issued and outstanding shares of Preferred Stock or the prior written approval of the Board of Directors as authorized by the holders of eighty percent (80%) of the Preferred Stock. No amendment, modification or waiver of any provision hereof shall extend to or affect any obligation not expressly amended, modified or waived or impair any right consequent thereon. No course of dealing, and no failure to exercise or delay in exercising any right, remedy, power or privilege hereunder, shall operate as a waiver, amendment or modification of any provision of this Certificate of Designation. 11. NOTICES. The Corporation shall distribute to the holders of shares of Preferred Stock copies of all notices, materials, annual and quarterly reports, proxy statements, information statements and any other documents distributed generally to the holders of shares of the Common Stock, at such times and by such method as such documents are distributed to such holders of shares of the Common Stock. 12. ATTORNEYS' FEES. Any holder of Preferred Stock shall be entitled to recover from the Corporation the reasonable attorneys' fees and expenses incurred by such holder in connection with enforcement by such holder of any obligation of the Corporation hereunder. -9- IN WITNESS HEREOF, the Corporation has caused its corporate seal to be affixed hereto and this Certificate of Designation to be executed as of this 10th day of July, 1998. GEOLOGISTICS CORPORATION, a Delaware corporation By: /s/ Gary S. Holter ---------------------------------------- Name: Gary S. Holter Title: Vice President and Chief Financial Officer EX-4.5 5 EXHIBIT 4.5 EXHIBIT 4.5 FIRST SUPPLEMENTAL INDENTURE FIRST SUPPLEMENTAL INDENTURE, dated as of July 13, 1998, GEOLOGISTICS AIR SERVICES INC., a Delaware corporation ("GEO AIR") that is a wholly-owned subsidiary of GEOLOGISTICS CORPORATION, a Delaware corporation (the "COMPANY"), and U. S. BANK TRUST NATIONAL ASSOCIATION (formerly doing business as FIRST TRUST NATIONAL ASSOCIATION, a national banking corporation), as trustee (the "TRUSTEE"), for the sole purpose of the grant of a guarantee by Geo Air under the Indenture dated as of October 29, 1997 (as amended from time to time, the "INDENTURE") with respect to the Company's 9 3/4% Senior Notes due 2007 (the "NOTES") entered into among the Company, the Guarantors (as defined therein) and the Trustee. Capitalized terms used herein without definition shall have the meanings given to them in the Indenture. WHEREAS, pursuant Section 4.17 of the Indenture, the Company has agreed to (a) cause each Restricted Subsidiary that is organized and existing under the laws of any State of the United States or the District of Columbia and that at any time becomes an obligor or guarantor with respect to any obligations under one or more Bank Credit Agreements to execute and deliver to the Trustee a supplemental indenture reasonably satisfactory to the Trustee pursuant to which such Restricted Subsidiary will Guarantee payment of the Notes on the terms set forth in the Indenture; and WHEREAS, GeoLogistics Air Services Inc. is a Restricted Subsidiary of the Company, as defined in the Indenture. NOW THEREFORE, each party hereto agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Notes: 1. GUARANTEE OF THE NOTES Geo Air hereby expressly assumes each of the obligations of a Guarantor, and upon execution of the Subsidiary Guaranty described below and this First Supplemental Indenture, the defined term "Subsidiary Guarantor" in the Indenture shall include Geo Air and the defined term "Subsidiary Guaranty" in the Indenture shall include the guaranty executed pursuant to Section 2 of this First Supplemental Indenture. 2. EXECUTION OF SUBSIDIARY GUARANTY Simultaneously with the execution and delivery of this First Supplemental Indenture, Geo Air shall execute and deliver to the Trustee a Subsidiary Guaranty in the form contemplated by the Indenture. 3. MISCELLANEOUS (a) The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. (b) THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF. (c) The provisions of this First Supplemental Indenture will take effect immediately upon its execution and delivery to the Trustee. -2- IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the date and year first written above. THE SUBSIDIARY GUARANTOR: GEOLOGISTICS AIR SERVICES INC. By: /s/ Gary S. Holter ----------------------------------- Name: Gary S. Holter Title: Vice President Assistant Secretary THE TRUSTEE: U.S. BANK TRUST NATIONAL ASSOCIATION By: /s/ Richard H. Prokosch ----------------------------------- Name: Richard H. Prokosch Title: Assistant Vice President EX-10.1 6 EXHIBIT 10.1 EXHIBIT 10.1 FOURTH AMENDED AND RESTATED STOCKHOLDERS AGREEMENT This FOURTH AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made and entered into as of July 10, 1998, by and between GeoLogistics Corporation, a Delaware corporation (the "COMPANY"), and each of the Holders listed on EXHIBIT A hereto (singularly a "HOLDER" and collectively, the "HOLDERS"). W I T N E S S E T H WHEREAS, each of the Holders have either purchased shares of the Common Stock or Preferred Stock (each as defined herein) of the Company or were granted Warrants (as defined herein) to purchase shares of the Common Stock of the Company; and WHEREAS, the Company and the Holders deem it to be in their best interests to provide for continuity in the control and operation of the Company to regulate certain of their rights in connection with their interests in the Company and to restrict the sale, assignment, transfer, encumbrance or other disposition of the Securities (as defined herein) to be issued to the Holders as contemplated hereby, and desire to enter into this Agreement in order to effectuate those purposes; NOW, THEREFORE, in consideration of the agreements and mutual covenants set forth herein, the parties agree as follows: SECTION 1. DEFINITIONS. As used in this Agreement, the following terms have the following meanings: "ACCREDITED INVESTOR" shall have the meaning set forth for such term in Regulation D under the Securities Act. "ACCREDITED OFFEREE" shall have the meaning set forth in SECTION 5(a). "ACQUIROR" has the meaning assigned to such term in SECTIONS 6(b) AND 7. "AFFILIATE" of a Holder means any Person which directly or indirectly controls, is controlled by, or is under common control with such Holder. "Control," "controlled by" and "under common control with" means direct or indirect possession of the power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise); PROVIDED that control shall be conclusively presumed when any Person or entity or affiliated group directly or indirectly owns ten percent (10%) or more of the securities having ordinary voting power for the election of a majority of the directors of a corporation. "AGREEMENT" means this Agreement, as the same shall be amended from time to time. "BANKS" mean, collectively, ING and Paribas. "BOARD OF DIRECTORS" means the Board of Directors of the Company. "BUSINESS DAY" means a day other than Saturday, Sunday or any other day on which banks located in the State of Colorado are authorized or obligated to close. "CLOSING DATE" means November 7, 1996. "COMMON STOCK" means the Company's Common Stock, $0.001 par value per share. "COMPANY" has the meaning assigned to such term in the preamble. "COMPANY ACCEPTANCE NOTICE" has the meaning assigned to such term in SECTION 4(d). "COMPANY TRANSFEREE" has the meaning assigned to such term in SECTION 5(a). "COMPANY TRANSFER NOTICE" has the meaning assigned to such term in SECTION 5(a). "COMPANY TRANSFER SECURITIES" has the meaning assigned to such term in SECTION 5(a). "EMPLOYEE STOCK PURCHASE PLAN" means the employee stock purchase plans adopted by the Board of Directors on May 1, 1996 and March 3, 1997. "EXECUTIVE COMMITTEE" shall have the meaning ascribed to such term in SECTION 9(b). "FAIR MARKET VALUE" shall mean the fair market value of the Company's Common Stock as determined by the Executive Committee on a fully-distributed basis without regard to liquidity or size relative to the number of shares outstanding; PROVIDED that such valuation shall ascribe value to Warrants as - 2 - the amount, if any, by which the value of the Common Stock underlying the warrant shall exceed the aggregate exercise price related thereto. "FAMILY MEMBER" means any Holder's spouse, siblings, children, children's spouses, grandchildren or their spouses or any trusts for the benefit of any of the foregoing. "FINANCIAL DEFAULT" shall mean with respect to the Company or any Subsidiary, any of the following: (i) the occurrence of a default under any indebtedness with a principal amount in excess of $20 million (either individually or in the aggregate) to the extent that such default is not cured or waived within thirty (30) days; (ii) the acceleration of any indebtedness with a principal amount in excess of $10 million (either individually or in the aggregate) to the extent not paid or rescinded within five (5) days; (iii) the imposition of any final and non-appealable judgments in excess of $10 million (either individually or in the aggregate) to the extent not paid or rescinded within five (5) days; or (iv) the filing of any voluntary or involuntary bankruptcy petition with respect to the Company or any Subsidiary to the extent not withdrawn within five (5) days. "FINANCIAL DEFAULT DISAGREEMENT" shall mean that, upon the occurrence of a Financial Default, the Board of Directors is unable to agree on the Company's course of action in response to a Financial Default. "HOLDERS" has the meaning assigned to such term in the preamble. "ING" means ING Capital (U.S.) Corporation. "INITIAL PUBLIC OFFERING" means the first underwritten public offering of Common Stock by the Company pursuant to a registration of shares under the Securities Act on a Form S-1 Registration Statement (or equivalent or successor form). "INTER VIVOS TRANSFEREE" has the meaning assigned to such term in SECTION 3(d). "MANAGEMENT" means each Person set forth on EXHIBIT B attached hereto, as the same may be amended from time to time. "MYERS" means William E. Myers, Jr. and any Myers Affiliate. "MYERS AFFILIATE" shall mean any (i) bona fide officer, director, shareholder or employee of W.E. Myers & Company rea- - 3 - sonably acceptable to the Company, (ii) Family Member of any of the foregoing individuals and (iii) partnership, corporation, trust or other entity controlled by William E. Myers, Jr. "OCM" means OCM Principal Opportunities Fund, L.P., a Delaware limited partnership. "OCM AFFILIATES" means any investor in or any employee of OCM or Oaktree Capital Management, LLC ("OAKTREE"), a California limited liability company, or in any company, joint venture, limited liability company, association or partnership of which OCM or Oaktree, is a shareholder, manager or general partner, as the case may be. "OCM ENTITY" means either or both of TCW and OCM, as the context indicates. "OCM ENTITY ACCEPTANCE NOTICE" has the meaning assigned to such term in SECTION 4(c). "OCM ENTITY FUNDING DEFAULT" means a circumstance whereby (i) an OCM Entity and WES&S have entered into a commitment to purchase Securities of the Company pursuant to a purchase agreement; (ii) such OCM Entity is in breach of its commitment to purchase such Securities; and (iii) WES&S ultimately completes its purchase under such purchase agreement. "OCM ENTITY OFFER" has the meaning assigned to such term in SECTION 4(b). "OCM ENTITY PURCHASE DEFAULT" means an OCM Entity is in breach of its purchase obligation under an OCM Entity Acceptance Notice in connection with certain transfers of the WES&S Shares as set forth in SECTION 4. "OCM ENTITY SHARES" means all the Securities now and hereafter held by OCM, any OCM Affiliate, TCW or any TCW Affiliate. "OCM ENTITY TRANSFER TERMINATION EVENT" means the first to occur of (i) a Qualified Public Offering, (ii) a Sell-Down Event, (iii) a WES&S Purchase Default, (iv) a WES&S Funding Default or (v) May 2, 2002. "OCM TRANSFER SECURITIES" has the meaning assigned to such term in SECTION (3)(a). "OFFER TO SELL" has the meaning assigned to such term in SECTION 5(b). - 4 - "OFFEREE" means, for the purposes of SECTION 4 hereof: (i) with respect to any proposed Transfer by an OCM Entity: WES&S; (ii) with respect to any proposed Transfer by WES&S: each OCM Entity; and (iii) with respect to any proposed Transfer by each of Management, Myers or the Banks: the Company, each OCM Entity and WES&S, as applicable. "PARIBAS" means Banque Paribas and Paribas North America, Inc. "PERMITTED TRANSFER" has the meaning assigned to such term in SECTION 3. "PERSON" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or agency or political subdivision thereof. "PREFERRED STOCK" shall mean the Company's Series A Participating Preferred Stock, par value $.001 per share. "PRO RATA" shall mean, with respect to any offer of shares of Common Stock or securities exercisable or convertible into shares of Common Stock, an offer based on the relative percentages of Securities then held by or issuable to all of the Holders to whom such offer is made. "PUBLIC OFFERING" means any offering of Common Stock to the public, including the Initial Public Offering, either on behalf of the Company or any of its stockholders, pursuant to an effective registration statement under the Securities Act. "PUBLIC TRANSFEREES" has the meaning assigned to such term in SECTION 2(c). "QUALIFIED PUBLIC OFFERING" means a Public Offering wherein the aggregate offering proceeds are not less than $30,000,000 (determined based on gross offering price paid to the Company at the closing of each such transaction for the offered securities). "QUALIFIED SALE" shall mean (i) any sale of all or substantially all of the assets of the Company or (ii) any sale, merger or liquidation of the Company with or into any entity other than to or with OCM, TCW, WES&S, an OCM Affiliate, a TCW Affiliate or a WES&S Affiliate whereby such entity or the holders of a majority of the voting stock thereof shall obtain (A) at least a majority of the voting stock of the surviving entity and (B) the right to elect a majority of the surviving entity's board of directors. - 5 - "RE-OFFER ACCEPTANCE NOTICE" has the meaning assigned to such term in SECTION 4(d). "RE-OFFER NOTICE" has the meaning assigned to such term in SECTION 4(d). "REFUSAL NOTICE" has the meaning assigned to such term in SECTION 4(a). "REFUSAL SECURITIES" has the meaning assigned to such term in SECTION 4(a). "REFUSAL TRANSFEREE" has the meaning assigned to such term in SECTION 4(a). "SECURITIES" shall mean the shares of Common Stock and Preferred Stock and any securities convertible or exercisable into shares of Common Stock or Preferred Stock, and whenever an amount of Securities is calculated or used in any provision of this Agreement, convertible or exercisable securities shall be counted as the number of shares of Common Stock issuable upon such conversion or exercise. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "SELL-DOWN EVENT" means an event, subject to SECTIONS 2, 3 AND 4, whereby WES&S sells or Transfers Securities (or an economic "capital interest" therein, whether directly or indirectly) to any Person; PROVIDED, HOWEVER, that the following Transfers shall not constitute a Sell-Down Event: (i) any Transfer made to a WES&S Affiliate or (ii) any Transfer made to any Person if (A) WES&S retains voting control of the Securities transferred to such Person and (B) the cumulative number of Securities so transferred (or the economic capital interest therein) by WES&S shall not exceed the Threshold Amount. "SELLING COMMON HOLDERS" has the meaning assigned to it in SECTIONS 6(b). "SELLING HOLDERS" has the meaning assigned to it in SECTION 7. "SELLING PREFERRED HOLDERS" has the meaning assigned to it in SECTIONS 6(c). "SIMON ENTITY" means Logistical Simon, L.L.C., a Delaware limited liability company, WESINVEST, Inc., a Delaware corporation or William E. Simon & Sons, L.L.C., a Delaware limited liability company. - 6 - "SUBSIDIARY" means any entity at least fifty percent (50%) owned or controlled either directly or indirectly by the Company or any of its Subsidiaries. "TCW" means TCW Special Credits Fund V - The Principal Fund, a California limited partnership, "TCW AFFILIATE" means any investor in or any employee of TCW, TCW Asset Management Company, a California corporation ("TAMCO"), Trust Company of the West, a California trust company ("TRUSTCO") or Oaktree Capital Management, LLC ("OAKTREE"), a California limited liability company, or in any company, joint venture, limited liability company, association or partnership of which TCW, TAMCO, Trustco or Oaktree, is a shareholder, manager or general partner, as the case may be. "THRESHOLD AMOUNT" means thirty percent (30%) of the shares held by WES&S as of the Closing Date (excluding for the purpose of this calculation any shares owned by WES&S to the extent received upon the exercise of its Warrants or otherwise acquired from parties other than the Company). "TRADING PRICE" means the trading price for each trading day: (a) if the Common Stock is traded on a national securities exchange, its last reported sale price on the preceding Business Day on such national securities exchange or, if there was no sale on that day, the last reported sale price on such national securities exchange on the next preceding Business Day on which there was a sale, all as made available over the Consolidated Last Sale Reporting System of the CTA Plan (the "CLSRS") or, if the Common Stock is not then eligible for reporting over the CLSRS, its last reported sale price on the preceding Business Day on such national securities exchange or, if there was no sale on that day, on the next preceding Business Day on which there was a sale on such exchange or (b) if the principal market for the Common Stock is the over-the-counter market, but the Common Stock is not then eligible for reporting over the CLSRS, but the Common Stock is quoted on the National Association of Securities Dealers Automated Quotations System ("NASDAQ"), the last sale price reported on NASDAQ on the preceding Business Day or, if the Common Stock is an issue for which last sale prices are not reported on NASDAQ, the closing bid quotation on such day, but in each of the next preceding two cases, if the relevant NASDAQ price or quotation did not exist on such day, then the price or quotation on the next preceding Business Day in which there was such a price or quotation. "TRANSFER" has the meaning assigned to such term in SECTION 2(a). - 7 - "TRANSFER NOTICE" has the meaning assigned to such term in SECTIONS 6(b) & 7. "TRANSFEROR" has the meaning assigned to such term in SECTION 4(a). "VOTING TERMINATION EVENT" has the meaning assigned to such term in SECTION 8(a). "WARRANT(S)" means the Warrants exercisable into the Common Stock of the Company at either a fixed or variable priced exercise rate. "WES&S" means Logistical Simon, L.L.C., a Delaware limited liability company, and for purposes of Sections 4(b) and 4(d) only and only in the event that WES&S offers to acquire an amount of Refusal Securities, includes Myers; PROVIDED, HOWEVER, that should WES&S and Myers each offer to acquire an amount of Refusal Securities (as defined in Section 4(a) hereof) that is oversubscribed pursuant to such Sections 4(b) and 4(d), the shares to be so purchased shall be allocated to each of WES&S and Myers Pro-Rata based upon the relative number of Securities owned by each entity as of such date. "WES&S AFFILIATE" means any Simon Entity or any partnership, limited liability company or corporation that directly or indirectly, through one or more intermediaries, has control of, is controlled by or is under common control with (i) any Simon Entity or (ii) any shareholders, partner or member of a Simon Entity or any such shareholder's, partner's or member's spouse, siblings, children, children's spouses, grandchildren or their spouses or any trusts for the benefit of any of the foregoing. "WES&S ACCEPTANCE NOTICE" has the meaning assigned to such term in SECTION 4(b). "WES&S FUNDING DEFAULT" means a circumstance whereby (i) an OCM Entity and WES&S have entered into a commitment to purchase the Securities of the Company pursuant to a purchase agreement; (ii) WES&S is in breach of its commitment to purchase such Securities; and (iii) an OCM Entity ultimately completes its purchase under such purchase agreement. "WES&S OFFER" has the meaning assigned to such term in SECTION 4(c). "WES&S PURCHASE DEFAULT" means WES&S is in breach of its purchase obligation under a WES&S Acceptance Notice in - 8 - connection with certain transfers of the OCM Entity Shares as set forth in SECTION 4. "WES&S SHARES" means all the Securities now and hereafter held by WES&S and any WES&S Affiliate. "WES&S TRANSFER SECURITIES" has the meaning assigned to such term in SECTION 3(b). "WES&S TRANSFER TERMINATION EVENT" means the first to occur of (i) a Qualified Public Offering, (ii) an OCM Entity Purchase Default, (iii) an OCM Entity Funding Default, (iv) the date on which the OCM Entities, in the aggregate, own less than fifty percent (50%) of the total number of shares held by the OCM Entities as of the Closing Date or (v) May 2, 2002. SECTION 2. PROVISIONS REGARDING TRANSFER. (a) GENERAL RESTRICTIONS. So long as this Agreement shall remain in force, none of the Securities may be issued, sold, assigned, transferred, given away or in any way disposed of (any of the foregoing being hereinafter referred to as a "TRANSFER") unless: (i) the Person in whose favor such Transfer is made shall deliver to the Company a written acknowledgment that the Securities to be transferred are subject to this Agreement and that such Person and such Person's successors in interest are bound hereby on the same terms as the Transferor of such Securities, but prior to any such Transfer, the Transferor shall give the Company (1) notice describing the manner and circumstances of the proposed Transfer and (2) if reasonably requested by the Company, a written opinion in form and substance reasonably satisfactory to legal counsel of the Company to the effect that the proposed Transfer may be effected without registration under the Securities Act or any applicable state law; (ii) such Transfer shall be made in compliance with the provisions of this Agreement, the Employee Stock Purchase Plan and the Management subscription agreements; or (iii) such Transfer shall be made pursuant to a public offering registered under the Securities Act and in accordance with applicable state law or pursuant to Rule 144 under the Securities Act. Any attempted Transfer other than in accordance with this Agreement shall be void, and the Company shall refuse to recognize any such Transfer and shall not reflect on its records - 9 - any change in record ownership of the Securities pursuant to any such attempted Transfer. (b) MECHANICS OF TRANSFER. The closing of any Transfer of Securities (other than pursuant to SECTION 2(a)(iii) above) shall take place at the principal executive offices of the Company. Any Holder who Transfers the Securities shall (i) take all such actions and execute and deliver all such documents as may be necessary or reasonably requested by the Company in order to consummate the Transfer of such Securities and (ii) pay to the Company such amounts as may be required for any applicable stock transfer taxes. (c) PLEDGE AND HYPOTHECATION PROHIBITED. In the case of Securities other than Preferred Stock, no Holder (other than any Persons not a party to this Agreement who acquire such Securities pursuant to a registration statement ("PUBLIC TRANSFEREES")) shall, prior to a Qualified Public Offering, in any manner pledge, hypothecate or encumber, or grant options with respect to, any such Securities held by such Holder, unless such Holder obtains the prior (i) written approval of the Executive Committee and (ii) written agreement of the designated assignee or secured party to acknowledge, accept and agree to be bound by the terms of this Agreement. No Holder of Preferred Stock (other than any Public Transferee) shall, in any manner pledge, hypothecate or encumber, or grant options with respect to any shares of Preferred Stock held by such Holder, unless such Holder obtains the prior (i) written approval of the Executive Committee and (ii) written agreement of the designated assignee or secured party to acknowledge, accept and agree to be bound by the terms of this Agreement. SECTION 3. TRANSFERS NOT SUBJECT TO RIGHT OF FIRST REFUSAL. The following Transfers (each a "PERMITTED TRANSFER") shall not be subject to the rights of first refusal set forth in SECTION 4 hereof: (a) CERTAIN TRANSFERS BY OCM ENTITY. Subject to the restrictions on Transfer set forth in SECTION 2, an OCM Entity or any subsequent holder of the OCM Entity Shares other than Preferred Stock ("OCM TRANSFER SECURITIES"), may Transfer or grant participation in any or all of the OCM Transfer Securities to (i) any OCM Affiliate or a TCW Affiliate in connection with an in-kind distribution, (ii) any Person pursuant to a demand or piggyback registration or (iii) any other Person to the extent the aggregate number of OCM Transfer Securities so transferred shall not exceed thirty percent (30%) of the aggregate number of OCM Transfer Securities purchased by the OCM Entities, in the aggregate, from the Company on the Closing Date and subsequent thereto. Any OCM Transfer Securities, or interest therein, so - 10 - transferred may subsequently be transferred back to an OCM Entity and upon such reacquisition such OCM Transfer Securities shall be subject to this Agreement; PROVIDED, HOWEVER, that any OCM Transfer Securities so reacquired by an OCM Entity shall not be subject to this Agreement to the extent that an OCM Entity purchased such OCM Transfer Securities pursuant to a registration statement or from a Public Transferee. (b) CERTAIN TRANSFERS BY WES&S. Subject to the restrictions on Transfer set forth in SECTION 2, WES&S or any subsequent holder of the WES&S Shares other than Preferred Stock ("WES&S TRANSFER SECURITIES") may Transfer or grant participation in any or all of the WES&S Transfer Securities to (i) any Person to the extent that such Transfer would not constitute a Sell-Down Event or (ii) any other Person pursuant to a demand or piggyback registration. Any WES&S Transfer Securities, or interest therein, so transferred may subsequently be transferred back to WES&S and upon such reacquisition such WES&S Transfer Securities shall be subject to this Agreement; PROVIDED, HOWEVER, that any WES&S Transfer Securities so reacquired by WES&S shall not be subject to this Agreement to the extent that WES&S purchased such WES&S Transfer Securities pursuant to a registration statement or from a Public Transferee. (c) CERTAIN TRANSFERS BY MANAGEMENT, MYERS OR THE BANKS. Each of Management, Myers, or the Banks, may Transfer any or all of their respective shares of Common Stock to any Person in connection with a piggyback registration. Subject to the restrictions on Transfer set forth in SECTION 2, Myers may transfer any or all of his Securities to a Myers Affiliate. Any shares of Common Stock, or interest therein, so transferred by a Holder pursuant to this SECTION 3(c) may subsequently be transferred back to such Holder and upon such reacquisition such shares of Common Stock shall be subject to this Agreement; PROVIDED, HOWEVER, that any shares of Common Stock so reacquired by such Holder shall not be subject to this Agreement to the extent that such Holder purchased such shares of Common Stock pursuant to a registration statement or from a Public Transferee. (d) INTER VIVOS TRANSFERS. Any Holder who is a natural person may transfer, by INTER VIVOS Transfer, any or all of his or her Securities to any other natural person who is a Family Member or to a trust primarily for the benefit of such natural person who is a Family Member or such Holder (an "INTER VIVOS TRANSFEREE"); PROVIDED that such Holder retains all voting rights with respect to such Securities, and; PROVIDED, FURTHER, that no Holder who is a natural person may make an INTER VIVOS transfer to any person unless such Holder shall comply with the provisions of SECTION 2. Subject to the restrictions of SECTION - 11 - 2, any Securities transferred pursuant to this SECTION 3(d) may subsequently be transferred back to such Holder. (e) CERTAIN TRANSFERS OF PREFERRED STOCK. Any Holder may Transfer not less than 3,000 shares of Preferred Stock to any Person and such Transfer shall not be subject to the provisions of Section 4 hereof. SECTION 4. RIGHT OF FIRST REFUSAL. Each Holder agrees that, except as provided in SECTIONS 3 AND 5 hereof, such Holder will not transfer any Securities, or any right, title or interest therein, unless such Holder shall have first made the offers to sell set forth in this SECTION 4. (a) REFUSAL NOTICE. A Holder that desires in good faith to Transfer any Securities that are subject to the provisions of Section 4(b), (c) or (d) (the "TRANSFEROR") shall deliver a written notice of such intent (the "REFUSAL NOTICE") to each Offeree as required pursuant to Section 4(b), (c) or (d). The Refusal Notice shall contain (i) a description of the proposed Transfer transaction and the terms thereof including the number and type of Securities (E.G., Preferred Stock, Common Stock or Warrants) proposed to be transferred (collectively, the "REFUSAL SECURITIES"), (ii) the name of each person to whom or in favor of whom the proposed Transfer is to be made (the "REFUSAL TRANSFEREE") and (iii) a description of the consideration to be received by the Transferor upon Transfer of the Refusal Securities; PROVIDED, HOWEVER, that if any Holder desires to Transfer any Securities pursuant to Rule 144 of the Securities Act, such Holder shall not be required to satisfy subsection (a)(ii) herein. The Refusal Notice shall be accompanied by a copy of the third party written offer (for purposes of this SECTION 4, an executed letter of intent stating the terms of such offer, or incorporating by reference therein a separate summary of terms which shall be deemed a written offer). No offer (covered by this SECTION 4) to Transfer to a Transferee shall be permissible, unless the consideration for the Transfer involved consists solely of cash. (b) TRANSFERS BY OCM ENTITY. Prior to an OCM Entity Transfer Termination Event, if an OCM Entity intends in good faith to sell or otherwise Transfer any OCM Transfer Securities to any Person, such OCM Entity shall deliver to WES&S, concurrently with the delivery of the Refusal Notice, a written offer to sell (the "OCM ENTITY OFFER") all, but not less than all, of such Refusal Securities which are the subject of the Refusal Notice. Each OCM Entity Offer shall contain the same terms and conditions, and shall be for the same consideration, as described in the Refusal Notice. Within five (5) Business Days - 12 - after the Refusal Notice is delivered to WES&S, WES&S may, by written notice delivered to such OCM Entity (a "WES&S ACCEPTANCE NOTICE"), accept the offer to acquire all, but not less than all, of the Refusal Securities as described in the Refusal Notice. Transfers of OCM Transfer Securities to WES&S pursuant to offers made and accepted in accordance with this SECTION 4 shall occur simultaneously on a Business Day not more than thirty (30) days after the date on which the WES&S Acceptance Notice is delivered to such OCM Entity. If WES&S breaches its obligation to purchase the Refusal Securities which are the subject of the Refusal Notice within thirty (30) days of the date on which the WES&S Acceptance Notice is delivered to such OCM Entity, (i) WES&S shall forfeit (A) any and all future rights of first refusal with respect to the OCM Transfer Securities and (B) any and all future rights of first refusal with respect to any proposed Transfer of Securities pursuant to SECTION 4(d) hereof, and (ii) except as provided in SECTION 4(f) hereof such failure shall constitute a WES&S Purchase Default. (c) TRANSFERS BY WES&S. Prior to a WES&S Transfer Termination Event, if WES&S intends in good faith to sell or otherwise Transfer any WES&S Transfer Securities to any Person, WES&S shall deliver to each OCM Entity, concurrently with the delivery of the Refusal Notice, a written offer to sell (the "WES&S OFFER") all, but not less than all, of such Refusal Securities which are the subject of the Refusal Notice. Each WES&S Offer shall contain the same terms and conditions, and shall be for the same consideration, as described in the Refusal Notice. Within five (5) Business Days after the Refusal Notice is delivered to each OCM Entity, each OCM Entity may, by written notice delivered to WES&S (an "OCM ENTITY ACCEPTANCE NOTICE"), accept the offer to acquire all, but not less than all, of the Refusal Securities as described in the Refusal Notice; PROVIDED HOWEVER, that if each OCM Entity elects to submit an OCM Entity Acceptance Notice, the WES&S Transfer Securities to be so purchased shall be allocated to each OCM Entity on such basis as may be agreed upon by the OCM Entities. Transfers of WES&S Transfer Securities to an OCM Entity pursuant to offers made and accepted in accordance with this SECTION 4 shall occur simultaneously on a Business Day not more than thirty (30) days after the date on which the OCM Entity Acceptance Notice is delivered to WES&S. If either OCM Entity breaches its obligation to purchase the Refusal Securities which are the subject of the Refusal Notice within thirty (30) days of the date on which the OCM Entity Acceptance Notice is delivered to WES&S, (i) both OCM Entities shall forfeit (A) any and all future rights of first refusal with respect to the WES&S Transfer Securities and (B) any and all future rights of first refusal with respect to any proposed Transfer of Securities pursuant to SECTION 4(d) hereof, - 13 - and (ii) except as provided in SECTION 4(f) hereof such failure shall constitute an OCM Entity Purchase Default. (d) TRANSFERS BY HOLDERS. Prior to a Qualified Public Offering (and in the case of Myers, if earlier, May 2, 2002), if any Holder (other than an OCM Entity and WES&S), subject to the transfer restrictions, if any, as set forth in the terms of such Holder's Warrant, intends in good faith to sell or otherwise Transfer any Securities to any Person, such Holder shall deliver to the Company, concurrently with the delivery of the Refusal Notice, a written offer to sell (the "COMPANY OFFER") all, but not less than all, of such Refusal Securities which are the subject of the Refusal Notice; PROVIDED, HOWEVER that if any such Holder intends to Transfer any Securities to the Company pursuant to the terms of such Holder's employment or subscription agreement, such Holder shall not be required to deliver a Refusal Notice pursuant to this subsection (d). Each Company Offer shall contain the same terms and conditions, and shall be for the same cash consideration, as described in the Refusal Notice. Within five (5) Business Days after the Refusal Notice is delivered to the Company, the Company may, by written notice delivered to such proposed Transferor (a "COMPANY ACCEPTANCE NOTICE"), accept the offer to acquire all, but not less than all, of the Refusal Securities as described in the Refusal Notice. If the Company does not return the Company Acceptance Notice within the required five (5) Business Day period, the proposed Transferor shall deliver to each OCM Entity and WES&S, concurrently with the delivery of a Refusal Notice ("RE-OFFER NOTICE") a written offer to sell (the "RE-OFFER") all but not less than all of such Refusal Securities which are the subject of the Refusal Notice; PROVIDED, HOWEVER, that the proposed Transferor shall not be obligated to deliver a Re-Offer Notice to an OCM Entity or WES&S to the extent that their respective rights of first refusal have expired as set forth in SECTIONS 4(b) AND (c) hereof. Within five (5) Business Days after the Re-Offer Notice is delivered to each OCM Entity and WES&S, each OCM Entity and WES&S may, by written notice delivered to such proposed Transferor (a "RE-OFFER ACCEPTANCE NOTICE"), accept the offer to acquire all, but not less than all, of the Refusal Securities as described in the Re-Offer Notice. Each of the Company, each OCM Entity and WES&S, as applicable, shall be required to complete the purchase of the Refusal Securities which are the subject of the applicable acceptance notice referred to in this SECTION 4(d) within thirty (30) days of receipt of the applicable acceptance notice by the proposed Transferor. If more than one of WES&S and the OCM Entities elect to submit a Re-Offer Acceptance Notice, the Securities to be so purchased shall be allocated to each entity which has submitted a Re-Offer Acceptance Notice Pro-Rata based upon the relative number of Preferred Stock owned by each such entity as of such date in the event of a Re-Offer Acceptance - 14 - Notice relating to Preferred Stock and the relative number of Securities other than Preferred Stock owned by each such entity as of said date in the event of a Re-Offer Acceptance Notice relating to Securities other than Preferred Stock. (e) ELECTION OF TRANSFEROR. In the event that an Offeree does not agree to purchase all of the Refusal Securities offered for sale to such Offeree by a Transferor, such Transferor has the right at such Transferor's election to (i) transfer the Refusal Securities to a third party in accordance with the terms of SECTION 4(f) below. (f) TRANSFERS TO THIRD PARTIES. If the Transfer of Refusal Securities to an Offeree is not completed within the period set forth in SECTIONS 4(b), (c) OR (d), as applicable, then such Transferor has the right to complete a sale transaction with a third party; PROVIDED, that the consideration received by such Transferor in respect of any such Transfer is not less than the consideration proposed by the Refusal Notice. Notwithstanding any forfeiture of future refusal rights as set forth in SECTIONS 4(b) AND (c), if such Transfer transaction with a third party is not completed within ninety (90) days of the date the Refusal Notice is received by each OCM Entity, WES&S or the Company, as the case may be, then each OCM Entity, WES&S or the Company, as the case may be, shall have the rights of first refusal with respect to any subsequent proposed sale of Securities covered by this SECTION 4. (g) TRANSFER OF SHARES. Transfers of Securities pursuant to offers made and accepted in accordance with this SECTION 4 shall be made subject to and in accordance with SECTION 2. Any Transfer made in violation of this SECTION 4 shall be void and of no force and effect. SECTION 5. PREEMPTIVE RIGHTS. If the Company issues any Common Stock or securities convertible into Common Stock, or any right, title or interest therein to any Person, then the Company shall make the offer to sell pursuant to, and otherwise comply with the requirements set forth in this SECTION 5. Notwithstanding the foregoing, the Company may Transfer Common Stock or securities convertible into Common Stock, and any right, title or interest therein without making the offer to sell as set forth in this SECTION 5 in connection with (i) a Public Offering, (ii) the issuance of shares of Common Stock in connection with the exercise of any Warrants, (iii) the issuance by the Company of shares of Common Stock or securities convertible into Common Stock to effect an acquisition, merger or consolidation for consideration other than cash; (iv) the issuance of Securities to certain employees, executive officers and directors of the Com- - 15 - pany pursuant to any stock option plan or stock purchase plan approved by the Board of Directors and (v) the issuance of Securities to any employee, director or officer of the Company or any of its Subsidiaries. Notwithstanding the foregoing, any rights or obligations pursuant to this SECTION 5 shall terminate no later than the date of an Initial Public Offering. The rights in this SECTION 5 shall not inure to the benefit of Myers with respect to any Warrants owned by Myers or any transferee therefrom. (a) COMPANY TRANSFER NOTICE. If the Company desires in good faith to Transfer Common Stock or securities convertible into Common Stock, the Company shall deliver a written notice of the proposed Transfer (the "COMPANY TRANSFER NOTICE") to each Holder that in the reasonable judgment of the Company is an Accredited Investor, or who can provide the Company with an opinion of counsel, reasonably satisfactory in form and substance to the Company, that the Company Transfer Securities (as defined below) may be sold to such Holder without registration under the Securities Act (each an "ACCREDITED OFFEREE"). The Company Transfer Notice shall contain a description of the proposed transaction and the terms thereof including the number of Securities and type of Securities proposed to be transferred (collectively, the "COMPANY TRANSFER SECURITIES"), the name of each person to whom or in favor of whom the proposed Transfer is to be made (the "COMPANY TRANSFEREE"), and a description of the consideration to be received by the Company upon Transfer of the Company Transfer Securities. On a day which is not earlier than the ten (10) days following delivery of the Company Transfer Notice and after having received the requisite approval from the Board of Directors, the Company may issue the Company Transfer Securities to the Company Transferee on the terms set forth in the Company Transfer Notice. (b) TERMS OF OFFER. Upon completion of the issuance of the Company Transfer Securities referred to in SUBSECTION (a) above, the Company shall deliver to each Accredited Offeree a written offer to sell (the "OFFER TO SELL") a Pro-Rata portion of an equivalent number of the Company Transfer Securities based upon such Holder's holdings of Securities other than Preferred Stock, provided that the Company may, in its sole discretion, make an Offer to Sell to all Holders if such Offer to Sell may be made in compliance with all applicable state and federal securities laws. The Offer to Sell shall be on the same terms and conditions, and shall be for cash. If the consideration described in the Company Transfer Notice is for something other than cash, the purchase price paid by each Holder for shares purchased pursuant to this SUBSECTION (b) shall be in cash at the Trading Price (or if no trading price is available, then the Fair - 16 - Market Value) of such Securities determined as of the issue date of the Company Transfer Securities. (c) ACCEPTANCE OF OFFER. Within thirty (30) days after receipt of an Offer to Sell, any Accredited Offeree may, by written notice delivered to the Company, accept the Offer to Sell in whole or in part. (d) TRANSFER OF SHARES. Transfers of Securities pursuant to offers made and accepted in accordance with this SECTION 5 or to a Company Transferee shall occur simultaneously on a Business Day not more than thirty (30) days after the last date on which any offer made in accordance with this SECTION 5 could have been accepted. Each such Transfer shall be made in accordance with SECTIONS 2(a) AND (b) hereof. SECTION 6. DRAG-ALONG. (a) QUALIFIED SALE. If prior to a Qualified Public Offering, (i) the Company agrees to be sold, merged or liquidated pursuant to a Qualified Sale and (ii) such Qualified Sale is approved by more than eighty percent (80%) of the outstanding shares of Common Stock entitled to vote on such transaction, then all Holders (other than Public Transferees), shall be deemed to have consented to such Qualified Sale and shall execute such documents to confirm such consent. (b) COMMON STOCK SALE. If, at any time prior to the consummation of a Qualified Public Offering, the Holders holding shares in excess of eighty percent (80%) of the issued and outstanding Common Stock (the "SELLING COMMON HOLDERS") elect to sell such shares of Common Stock to the Company or a third party (other than an OCM Entity, WES&S, an OCM Affiliate, a TCW Affiliate or a WES&S Affiliate) (an "ACQUIROR"), then the Acquiror shall have the right, at its option, to purchase from the Holders other than the Selling Common Holders and any Public Transferees (the "NON-SELLING COMMON HOLDERS"), the same Pro-Rata portion of Securities (other than Preferred Stock) as is being acquired from the Selling Common Holders at the same price per Security (other than Preferred Stock), with the same form of consideration and upon the same terms and conditions as set forth in the Transfer Notice (as defined below); PROVIDED, HOWEVER, that the price paid to any warrantholder shall be the price paid by the Acquiror for each share of Common Stock less any exercise price payable by such warrantholder. (b) PREFERRED STOCK SALE. If at any time the Holders holding shares in excess of eighty percent (80%) of the issued and outstanding shares of Preferred Stock (the "SELLING PREFERRED HOLDERS") elect to sell such shares of Preferred Stock to an Acquiror, then the Acquiror shall have the right, at its option, - 17 - to purchase from the Holders other than the Selling Preferred Holders and any Public Transferees (the "NON-SELLING PREFERRED HOLDERS"), the same Pro-Rata portion of Preferred Stock as is being acquired from the Selling Preferred Holders at the same price per share of Preferred Stock, with the same form of consideration and upon the same terms and conditions as set forth in the Transfer Notice (as defined below). (c) EXERCISE OF RIGHTS. To exercise this drag-along right, the Selling Common Holders or Selling Preferred Holders shall provide written notice (a "TRANSFER NOTICE") to each Non-Selling Common Holder or Non-Selling Preferred Holder, respectively, ten (10) Business Days following any such Transfer of Common Stock or Preferred Stock, respectively, explaining the terms of such offer and identifying the name and address of the Acquiror. If the Acquiror exercises its right to purchase a portion, but not all, of the Securities owned by the Non-Selling Common Holders or Non-Selling Preferred Holder, as applicable, then such Acquiror shall purchase a Pro Rata portion of the Securities from each such Non-Selling Common Holder or Non-Selling Preferred Holder, respectively, within twenty (20) Business Days following the sale of Securities by the Selling Common Holder or Selling Preferred Holder, as applicable. SECTION 7. TAG-ALONG. Prior to a Qualified Public Offering, if Holders (other than Public Transferees) holding shares in excess of seventy-five percent (75%) of the issued and outstanding Common Stock (the "SELLING HOLDERS") elect to sell, dispose of or otherwise Transfer such shares of Common Stock to a third party (other than an OCM Entity, WES&S, an OCM Affiliate, a TCW Affiliate or a WES&S Affiliate)(the "ACQUIROR"), then, at least twenty (20) days prior to any such Transfer by the Selling Holders of any Common Stock, the Selling Holders shall provide to each Holder other than a Selling Holder and Public Transferee (a "NON-SELLING HOLDER") a written notice (a "TRANSFER NOTICE") explaining the terms of such transfer and identifying the name and address of the potential Acquiror. Upon receipt of such Transfer Notice, each such Non-Selling Holder shall have the right, upon delivery of a written request to the Selling Holders within twenty (20) days of the date the Transfer Notice is received by such Non-Selling Holder, to cause the potential Acquiror to purchase from such Non-Selling Holder a Pro-Rata portion of the Securities other than Preferred Stock which are proposed to be sold by the Selling Holders (on a fully-diluted basis) in the Transfer Notice at the same price and on the same terms and conditions contained in the Transfer Notice delivered in connection with such proposed transaction; PROVIDED, HOWEVER, that the price paid to any warrantholder shall be the price paid - 18 - by the Acquiror for each share of Common Stock less any exercise price payable by such warrantholder. SECTION 8. BOARD OF DIRECTORS. (a) PRE-VOTING TERMINATION EVENT BOARD. Prior to the first to occur of (i) an Initial Public Offering, (ii) a Sell-Down Event, (iii) a WES&S Purchase Default, (iv) a WES&S Funding Default, (v) a Financial Default Disagreement, (vi) an OCM Entity Purchase Default, (vii) an OCM Entity Funding Default or (viii) May 2, 2002 (in each case a "VOTING TERMINATION EVENT"), the Board of Directors shall at all times consist of eight (8) members. Each Holder of Securities hereby agrees to cause all such Securities that are entitled to vote and are registered in the name of such Holder to be voted, and will otherwise take or cause to be taken all such other action as may be necessary, so that the Board of Directors of the Company shall at all times, until a Voting Termination Event, consist of eight (8) members, of which two (2) members shall be designated by OCM (an "OCM DIRECTOR"), one (1) member shall be designated by TCW (a "TCW DIRECTOR"), three (3) members shall designated by WES&S (a "WES&S DIRECTOR"), one (1) member shall be the Chief Executive Officer of the Company and one (1) member shall be William E. Myers, Jr. (b) POST-VOTING TERMINATION EVENT BOARD. Upon a Voting Termination Event that is not caused by an Initial Public Offering, the Board of Directors of the Company shall at all times consist of at least five (5) members or such greater number that shall be needed to satisfy the terms of this SECTION 8(b). Each Holder of Securities hereby agrees to cause all such Securities that are entitled to vote and are registered in the name of such Holder to be voted, and will otherwise take or cause to be taken all such other action as may be necessary, so that the Board of Directors shall at all times, after a Voting Termination Event that is not caused by an Initial Public Offering, consist of: (A) (i) a majority of Board of Directors seats designated by an OCM Entity, PROVIDED, that the combined holdings of the OCM Entities are fifty percent (50%) or more of the voting stock and the Voting Termination Event is due to an event other than an OCM Entity Funding Default or an OCM Entity Purchase Default, (ii) one (1) Board of Directors seat less than a majority designated by an OCM Entity, PROVIDED, that either (x) the combined holdings of the OCM Entities are at least twenty-five percent (25%) but less than fifty percent (50%) of the voting stock or (y) the combined holdings of the OCM Entities are fifty percent (50%) or more of the voting stock and the Voting Termination Event is due solely to an OCM Entity Funding Default or an OCM Entity Purchase Default, or (iii) one (1) Board of Directors seat designated by an OCM Entity, PROVIDED, that the combined holdings of the OCM Entities are at least ten percent (10%) but - 19 - less than twenty-five (25%) of the voting stock (in each case, an "OCM ENTITY TERMINATION DIRECTOR"); (B) one (1) Board of Directors seat to be the Chief Executive Officer; (C) one (1) Board of Directors seat to be William E. Myers Jr. and (D) the remainder of the board seats to be designated by WES&S (a "WES&S TERMINATION DIRECTOR"); PROVIDED, that in no event shall WES&S designate less than one (1) Board of Directors seat. (c) INITIAL BOARD OF DIRECTORS. The Board of Directors, as of the Closing Date, shall consist of the following members: Stephen A. Kaplan (TCW Director) Vincent J. Cebula (OCM Director) (OCM Executive Director) Richard J. Goldstein (OCM Director) William E. Simon, Jr. (WES&S Director) Michael B. Lenard (WES&S Director) (WES&S Executive Director) Conor T. Mullett (WES&S Director) Roger E. Payton (Chief Executive Officer) William E. Myers, Jr. (an individual) each of whom shall hold office for a term of one (1) year until the next annual or special meeting of Holders called for the purpose of electing directors as provided in SECTION 8(a) AND (b) of this Agreement or in the Bylaws. Notwithstanding the foregoing designation, upon a Voting Termination Event that is not caused by an Initial Public Offering, the directors designated in this SECTION 8(c) shall be subject to removal and redesignation as set forth in SECTION 8(b) hereof. (d) FILLING VACANCIES, ETC. At any time a vacancy is created on the Board by the death, removal (with or without cause) or resignation of any one of the Directors, no action shall be taken by the Board until the Board is reconstituted with the appropriate number of directors. Only OCM or an OCM Affiliate shall have the right to remove an OCM Director or an OCM Entity Termination Director appointed by OCM, or to fill a vacancy caused by the resignation, removal (with or without cause) or death of such OCM Director or OCM Entity Termination Director. Only TCW or a TCW Affiliate shall have the right to - 20 - remove a TCW Director or an OCM Entity Termination Director appointed by TCW, or to fill a vacancy caused by the resignation, removal (with or without cause) or death of such TCW Director or OCM Entity Termination Director. Only WES&S shall have the right to remove a WES&S Director or to fill a vacancy caused by the resignation, removal (with or without cause) or death of such WES&S Director or WES&S Termination Director. For all other vacancies, the remaining directors shall meet in person or by telephone for the purpose of approving and appointing a director in accordance with the provisions set forth in SECTIONS 8(a) AND (b) hereof or in the By-Laws. (e) COMPENSATION; LIABILITY COVERAGE. William E. Myers, Jr. and any directors who are employees of OCM, TCW or WES&S shall not be entitled to compensation (other than reimbursement of reasonable out-of-pocket expenses incurred in connection with board meetings or director-related activities); PROVIDED HOWEVER, that if directors who are either employees of the Company or are newly admitted directors after the Closing Date receive additional compensation in their capacity as directors, then such OCM Directors, TCW Director, WES&S Directors, William E. Myers, Jr., OCM Entity Termination Directors or WES&S Termination Directors shall be entitled to receive an equivalent consideration. Within sixty (60) days of the Closing Date, the Company shall secure for the benefit of all Directors and Officers liability coverage from a reputable insurer selected by the Company with coverages which are not less than Five Million Dollars ($5,000,000) and deductibles which are customary for companies of comparable size. If the Company shall ever fail to pay when due any premium or other charge with respect to such insurance coverage, or otherwise fail to renew such coverage, any Holder may pay such premium or charge, or renew such coverage, and the Company shall promptly reimburse such Holder. (f) ADDITIONAL OCM ENTITY RIGHTS. So long as an OCM Entity owns any Common Stock: (i) OCM, TCW, any such OCM Affiliate or TCW Affiliate, or any designated representative on behalf of such OCM Affiliate or TCW Affiliate (1) shall be entitled to discuss the business operations, properties and financial and other conditions of the Company with any authorized officer, employee, agent, representative, director or independent accountant of the Company and, upon reasonable notice to the Company, any such authorized officer, agent, representative, director or independent accountant of any Subsidiary of the Company, (2) shall be entitled to submit proposals or suggestions to the Company's management from time to time with the requirement that the management of the - 21 - Company and, upon reasonable notice to the Company, management of any Subsidiary of the Company shall discuss such proposals or suggestions with OCM, TCW, any such OCM Affiliate or TCW Affiliate, or any designated representative on behalf of each OCM, TCW, any such OCM Affiliate or TCW Affiliate within a reasonable period after such submission, and (3) shall be entitled to call a meeting with the management of the Company and, upon reasonable notice to the Company, management of any Subsidiary of the Company at reasonable times and on reasonable notice in order to discuss such proposals or suggestions or for other purposes. (ii) OCM, TCW, any such OCM Affiliate or TCW Affiliate, or any designated representative on behalf of OCM, TCW, or such OCM Affiliate or TCW Affiliate, shall be entitled to examine and make abstracts from the books and records, operating reports, budgets and other financial reports of the Company as are available to the management of the Company, to visit and inspect the facilities of the Company and, upon reasonable notice to the Company, the facilities of any Subsidiary of the Company and to reasonably request information all at reasonable times and intervals (and on reasonable notice to the Company) concerning the general status of financial condition and operations of the Company. (iii) Upon request, OCM, TCW, any such OCM Affiliate or TCW Affiliate, or any designated representative on behalf of OCM, TCW or such OCM Affiliate or TCW Affiliate, shall be entitled to receive, when available, copies of (1) financial statements, forecasts and projections provided to or approved by the Board of Directors of the Company and/or (2) such other business or financial data as OCM, TCW, any such OCM Affiliate or TCW Affiliate, or any designated representative on behalf of OCM, TCW or such OCM Affiliate or TCW Affiliate, may reasonably request. (iv) each of OCM and TCW will hold, and will use its best efforts to cause the OCM Affiliates and the TCW Affiliates, as applicable, to hold, in strict confidence from any Person (other than any such Affiliate or Person who has provided, or who is considering providing, financing to the Company or purchasing securities of the Company from OCM or an OCM Affiliate), unless (i) compelled to disclose by judicial or administrative process or by other requirements of law or (ii) disclosed in an action or proceeding brought by a party hereto in pursuit of its rights or in the exercise of its remedies hereunder, all documents and information concerning the Company furnished to it by the Company in connection with this SECTION 8(f), except to the -22- extent that such documents or information can be shown to have been (a) previously known by the party receiving such documents or information, (b) in the public domain (either prior to or after the furnishing of such documents or information hereunder) through no fault of such receiving party or (c) later acquired by the receiving party from another source if the receiving party is not aware that such source is under an obligation to another party hereto to keep such documents and information confidential. (g) NONTRANSFERABILITY. Notwithstanding any other provision of this Agreement to the contrary, the rights of OCM, TCW, WES&S and William E. Myers, Jr. pursuant to this SECTION 8 shall not be transferable to any transferee; PROVIDED, HOWEVER, that each of OCM, TCW and WES&S may transfer their rights pursuant to this SECTION 8 to an OCM Affiliate, a TCW Affiliate or a WES&S Affiliate, respectively. (h) VOTING AGREEMENT. All parties to this Agreement agree that this SECTION 8 shall constitute a voting agreement within the meaning of Section 218 of the Delaware General Corporation Law and, subject to the other express terms of this Agreement, shall be of the maximum duration permitted under the Delaware General Corporation Law. SECTION 9. CORPORATE GOVERNANCE. (a) BOARD VOTING; MANAGEMENT. Prior to a Voting Termination Event and except with respect to the daily affairs and operations of the Company arising in the ordinary course of business, which affairs shall be attended to by the officers of the Company under the ultimate direction of the Board of Directors, no action shall be taken, securities issued, monies borrowed, sum expended, decision made or obligation incurred by or on behalf of the Company or any of its Subsidiaries with respect to any matter, unless approved by at least six (6) Directors or as set forth in SECTION 9(b) below. (b) EXECUTIVE COMMITTEE. Prior to a Voting Termination Event, an Executive Committee (the "EXECUTIVE COMMITTEE") consisting of three (3) members of the Board of Directors shall be authorized to take any action on behalf of the Board of Directors (in between meetings of the Board of Directors) upon the unanimous approval of such Executive Committee, including, without limitation, the declaration of dividends, the issuance of shares of capital stock or any other equity or debt security, or option or security convertible into equity or debt securities, of the Company, and the adoption of a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law. Each of OCM and WES&S shall designate one (1) OCM Director (an "OCM EXECUTIVE DIRECTOR") and one (1) WES&S -23- Director (a "WES&S EXECUTIVE DIRECTOR"), respectively, to sit on the Executive Committee; and the third member of the Executive Committee shall be the Chief Executive Officer of the Company. Only OCM shall have the right to remove (with or without cause) an OCM Executive Director or to fill a vacancy caused by the resignation, removal or death of such OCM Executive Director. Only WES&S shall have the right to remove (with or without cause) a WES&S Executive Director or to fill a vacancy caused by the resignation, removal or death of such WES&S Executive Director. (c) AUDIT AND COMPENSATION COMMITTEES. The Board of Directors may, by resolution passed by a majority of the total number of directors which the Company would at the time have if there were no vacancies, designate an audit committee of the Board of Directors (the "AUDIT COMMITTEE"), which shall be responsible for reviewing the scope of the Company's independent auditors' examination of the Company's financial statements and receiving and reviewing their reports, and a compensation committee of the Board of Directors (the "COMPENSATION COMMITTEE"), which shall be responsible and have authority for determining the Company's policies with respect to the nature and amount of all compensation to be paid to the Company's executive officers and administering the Company's benefit plans and shall also have the authority to issue shares of capital stock or any other equity or debt security, or option or security convertible into equity or debt securities, of the Company. Prior to a Voting Termination Event each of the Audit Committee and the Compensation Committee shall consist of two members, one of whom shall be an OCM Director that is designated for membership on such committee by OCM and one of whom shall be a WES&S Director that is designated for membership on such committee by WES&S. Only OCM shall have the right to remove an OCM Director who is a member of the Audit Committee or Compensation Committee or to fill a vacancy on the Audit Committee or Compensation Committee caused by the resignation, removal or death of such OCM Director. Only WES&S shall have the right to remove a WES&S Director who is a member of the Audit Committee or Compensation Committee or to fill a vacancy on the Audit Committee or Compensation Committee caused by the resignation, removal or death of such WES&S Director. (d) SHAREHOLDER VOTING. Prior to a Voting Termination Event, all such actions taken by, in the name of or on behalf of the holders of Common Stock shall require an affirmative vote of the holders representing at least eighty percent (80%) of the issued and outstanding shares entitled to vote. Upon a Voting Termination Event, all such actions taken by, in the name of or on behalf of the holders of Common Stock shall require an affirmative vote of a majority of the issued and outstanding shares entitled to vote. -24- SECTION 10. CERTIFICATES. (a) RESTRICTIVE ENDORSEMENTS. Each certificate evidencing any Securities shall bear a legend in substantially the following form: "The [shares][warrant] evidenced by this certificate [and the shares of Common Stock into which any Warrant represented hereby is convertible] are subject to that certain [a Warrant, dated as of _________,] [Subscription Agreement, dated as of _________,] [Employee Stock Purchase Plan, dated as of ________,] [Preferred Stock Purchase Agreement, dated as of _______,] a Stockholders Agreement, dated as of ________, and Registration Rights Agreement, dated as of ___________ copies of which are on file at the principal office of the Company and will be furnished to the holder on request to the Secretary of the Company. Such [Warrant,] [Subscription Agreement] [Employee Stock Purchase Plan] [Preferred Stock Purchase Agreement] Stockholders Agreement and Registration Rights Agreement provide, among other things, for certain restrictions on voting, sale, transfer, pledge, hypothecation or other disposition of the (securities) [warrant] evidenced by this certificate [and the shares of Common Stock purchasable upon exercise of the warrant] and that such securities may be subject to purchase by the Company as well as certain other persons upon the occurrence of certain events. Any issuance, sale, assignment, transfer or other disposition of the securities evidenced by this certificate to persons who are not party to such Stockholders Agreement shall be null and void." In addition, unless counsel to the Company has advised the Company that such legend is no longer needed, each certificate evidencing the Securities shall bear a legend in substantially the following form: "The securities [warrant] evidenced by this certificate [and the shares of common stock purchasable upon exercise of the warrant] have not been registered pursuant to the Securities Act of 1933, as amended (the "Act"), or any state securities law, and such securities [warrant] may not be sold, transferred or otherwise disposed of unless the same are registered and qualified in accordance with the Act and any applicable state securities laws, or in the opinion of counsel -25- reasonably satisfactory to the Company such registration and qualification are not required." (b) REPLACEMENT CERTIFICATES. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any certificate evidencing any Securities, and (in the case of loss, theft or destruction) of indemnity reasonably satisfactory to the Company, upon surrender and cancellation of such certificate or receipt of such indemnity, the Company will execute, register and deliver a new certificate of like tenor in lieu of such lost, stolen, destroyed or mutilated certificate. SECTION 11. REPRESENTATIONS. Each Holder represents that such Holder is the record and beneficial owner of the number of issued and outstanding Securities appearing opposite such Holder's name in Exhibit A attached hereto, free and clear of any option, lien, encumbrance or charge of any kind whatsoever. SECTION 12. EQUITABLE RELIEF. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce such provisions. SECTION 13. MISCELLANEOUS. (a) NOTICES. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the parties at the following addresses or facsimile numbers: (i) (A) if to the Company, at 13952 Denver West Parkway Golden, Colorado 80401 Facsimile No.: (303) 704-4410 Attention: Chief Executive Officer (B) with copies to OCM, TCW and WES&S, at the respective addresses set forth below -26- (ii) if to TCW or OCM, at TCW Special Credits Fund V - The Principal Fund C/O Oaktree Capital Management, LLC 555 South Hope St., 22nd Floor Los Angeles, CA 90071 Facsimile No.: (213) 694-1593 Attention: Vincent J. Cebula OCM Principal Opportunities Fund, L.P. C/O Oaktree Capital Management, LLC 555 South Hope St., 22nd Floor Los Angeles, CA 90071 Facsimile No.: (213) 694-1593 Attention: Vincent J. Cebula with copies to: Oaktree Capital Management, LLC 550 South Hope Street 22nd Floor Los Angeles, California 90071 Facsimile No.: (213) 694-1599 Attention: Kenneth Liang, Esq. Milbank, Tweed, Hadley & McCloy 601 South Figueroa Street 30th Floor Los Angeles, California 90017 Facsimile No.: (213) 629-5063 Attention: Eric H. Schunk, Esq. (iii) if to WES&S, at William Simon & Sons, LLC 10990 Wilshire Blvd., Suite 1750 Los Angeles, CA 90024 Facsimile No.: (310) 575-3258 Attention: Michael Lenard with copies to: Latham & Watkins 633 West Fifth Street Suite 4000 Los Angeles, California 90071-2007 Facsimile No.: (213) 891-6763 Attention: Paul D. Tosetti, Esq. -27- (iv) if to any other Person who is the registered holder of any Securities to the address for the purpose of such holder as it appears in the stock ledger of the Company. All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto. (b) WAIVER. No failure or delay on the part of the parties or any of them in exercising any right, power or privilege hereunder, nor any course of dealing between the parties or any of them shall operate as a waiver of any such right, power or privilege nor shall any single or partial exercise of any such right, power or privilege preclude the simultaneous or later exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and are not exclusive of any rights or remedies which the parties or any of them would otherwise have. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the other parties or any of them to take any other or further action in any circumstances without notice or demand. (c) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. (d) GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware without regard to principles of conflict of laws. (e) FILING. A copy of this Agreement and of all amendments hereto shall be filed at the principal office of the Company. -28- (f) AMENDMENT OR TERMINATION. Prior to a Voting Termination Event, (i) the provisions of this Agreement relating exclusively to Common Stock or Securities other than Preferred Stock may be amended or terminated at any time only by an instrument in writing signed by the Company and the Holders beneficially owning at least eighty percent (80%) of the issued and outstanding shares of Common Stock, (ii) the provisions of this Agreement relating exclusively to Preferred Stock may be amended or terminated at any time only by an instrument in writing signed by the Company and the Holders beneficially owning at least eighty percent (80%) of the issued and outstanding Preferred Stock, and (iii) the provisions of this Agreement relating to Common Stock, Securities other than Preferred Stock and Preferred Stock may be amended or terminated only by an instrument in writing signed by the Company and Holders of eighty percent (80%) of the issued and outstanding shares of Common Stock and eighty percent (80%) of the issued and outstanding shares of Preferred Stock. Upon a Voting Termination Event, this Agreement may be amended or terminated at any time by an instrument in writing signed by the Company and the Holders beneficially owning a majority of the issued and outstanding shares entitled to vote. Notwithstanding the foregoing, (i) no amendment or modification to SECTION 8 OR 9 hereof may be made without the consent of the Holders beneficially owning ninety percent (90%) of the issued and outstanding Common Stock and (ii) upon receiving the unanimous written consent of each of the OCM Entities and WES&S, the Company may (A) add new Holders to this Agreement by attaching a supplemental signature page dated as of the date of execution and (B) amend Exhibits A and B. (g) BENEFIT AND BINDING EFFECT. Except as otherwise provided in this Agreement, no right under this Agreement shall be assignable and any attempted assignment in violation of this provision shall be void. Subject to compliance with the terms of this Agreement regarding Transfer of Securities, this Agreement shall be binding upon and inure to the benefit of the parties and their executors, administrators, personal representatives, heirs, successors and permitted assigns. Except as set forth in this SUBSECTION (g), this Agreement does not create and shall not be construed as creating any rights enforceable by any Person not a party hereto. (h) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. -29- IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amended and Restated Stockholders Agreement as of the day and year first above written. The Company: GEOLOGISTICS CORPORATION By: /s/ Roger E. Payton ---------------------------------- Roger E. Payton President and Chief Executive Officer Holders: TCW SPECIAL CREDITS FUND V - THE PRINCIPAL FUND By: TCW ASSET MANAGEMENT COMPANY, its General Partner By: /s/ Stephan A. Kaplan ---------------------------------- Stephen A. Kaplan Authorized Signatory By: /s/ Vincent J. Cebula ---------------------------------- Vincent J. Cebula Authorized Signatory OCM PRINCIPAL OPPORTUNITIES FUND, L.P. By: OAKTREE CAPITAL MANAGEMENT, LLC, its General Partner By: /s/ Stephan A. Kaplan ---------------------------------- Stephen A. Kaplan Principal By: /s/ Vincent J. Cebula ---------------------------------- Vincent J. Cebula Managing Director LOGISTICAL SIMON, L.L.C. By: WESINVEST, Inc. its Manager By: /s/ Michael B. Lenard ---------------------------------- Michael B. Lenard President [signature page continues] ING CAPITAL (U.S.) CORPORATION By: /s/ ---------------------------------- Name: Title: BANQUE PARIBAS By: /s/ Steven M. Heinen ---------------------------------- Name: Title: PARIBAS NORTH AMERICA, INC. By: /s/ John G. Martinez ---------------------------------- Name: Title: /s/ Roger E. Payton --------------------------------------- Roger E. Payton, as an individual /s/ Gary Holter --------------------------------------- Gary Holter, as an individual /s/ Larry Marzullo --------------------------------------- Larry Marzullo, as an individual /s/ William E. Myers, Jr. --------------------------------------- William E. Myers, Jr., as an individual /s/ Kurt Kamm --------------------------------------- Kurt Kamm, as an individual /s/ William Kidd --------------------------------------- William Kidd, as an individual /s/ David W.M. Harvey --------------------------------------- David W.M. Harvey, as an individual [signature page continues] /s/ Brian E. Sanderson ------------------------------------ Brian E. Sanderson, as an individual /s/ Edward R. Mandell ------------------------------------ Edward R. Mandell, as an individual /s/ Kenneth S. Ogden ------------------------------------ Kenneth S. Ogden, as an individual /s/ James L. Mazzuca ------------------------------------ James L. Mazzuca, as an individual /s/ Mark Lundgren ------------------------------------ Mark Lundgren, as an individual /s/ Paul Stone ------------------------------------ Paul Stone, as an individual /s/ Christine Stone ------------------------------------ Christine Stone, as an individual /s/ Douglas Cruikshank ------------------------------------ Douglas Cruikshank, as an individual /s/ Ronald S. Cruse ------------------------------------ Ronald S. Cruse, as an individual /s/ Steve Hitchcock ------------------------------------ Steve Hitchcock, as an individual /s/ Paul D. Smith ------------------------------------ Paul D. Smith, as an individual /s/ Abe Ranish ------------------------------------ Abe Ranish, as an individual /s/ Luis Solis ------------------------------------ [signature page continues] Luis Solis, an individual /s/ Larry Tieman ------------------------------------ Larry Tieman, an individual /s/ Joe Monaghan ------------------------------------ Joe Monaghan, an individual /s/ Ben Cassell ------------------------------------ Ben Cassell, an individual /s/ Randy Valentino ------------------------------------ Randy Valentino, an individual /s/ Diego Hidalgo ------------------------------------ Diego Hidalgo, an individual /s/ Louis Mitchell ------------------------------------ Louis Mitchell, an individual /s/ Sam Schotsky ------------------------------------ Sam Schotsky, an individual /s/ Dave Martin ------------------------------------ Dave Martin, an individual /s/ Russ Krueger ------------------------------------ Russ Krueger, an individual /s/ Ove Anderson ------------------------------------ Ove Anderson, an individual /s/ Jim Bruder ------------------------------------ Jim Bruder, an individual /s/ Peter Schwerdt ------------------------------------ Peter Schwerdt, an individual /s/ Ron Evinou ------------------------------------ Ron Evinou, an individual /s/ Bruno Setz ------------------------------------ Bruno Setz, an individual /s/ Manoutchehr Ardalan ------------------------------------ Manoutchehr Ardalan, an individual /s/ J.G. Birrell ------------------------------------ J.G. Birrell, an individual /s/ Donald D. Branson ------------------------------------ Donald D. Branson, an individual /s/ John Connolly ------------------------------------ John Connolly, an individual /s/ Robert J. Fruchterman ------------------------------------ Robert J. Fruchterman, an individual /s/ Deborah A. MacDougall ------------------------------------ Deborah A. MacDougall, an individual /s/ Mitchell J. Martin ------------------------------------ Mitchell J. Martin, an individual /s/ Christian E. Meyer ------------------------------------ Christian E. Meyer, an individual /s/ Stephen J. Zimmer ------------------------------------ Stephen J. Zimmer, an individual /s/ Jack Wasp ------------------------------------ Jack Wasp, an individual /s/ Wolfgang Hollermann ------------------------------------ Wolfgang Hollermann, an individual /s/ Andrew Bernard ------------------------------------ [signature page continues] Andrew Bernard, an individual ELGAR TRADING LIMITED By: /s/ Ronald Jackson ------------------------------------ Ronald Jackson, as attorney in fact for Elgar Trading Limited COTECH COMPANY INC. By: /s/ Ronald Jackson ------------------------------------ Ronald Jackson, as attorney in fact for Elgar Trading Limited HERA VENTURES LIMITED By: /s/ Ronald Jackson ------------------------------------ Ronald Jackson, as attorney in fact for Elgar Trading Limited /s/ Anthony J. Quinn ------------------------------------ Anthony J. Quinn, an individual /s/ Sergey Kuzminykh ------------------------------------ Sergey Kuzminykh, an individual /s/ Audrey Jackel ------------------------------------ Audrey Jackel, an individual /s/ Sherry Aaholm ------------------------------------ Sherry Aaholm, an individual /s/ Grant Wattman ------------------------------------ Grant Wattman, an individual /s/ Charlie Hitt ------------------------------------ Charlie Hitt, an individual /s/ Mark Jerome ------------------------------------ Mark Jerome, an individual [signature page continues] /s/ Ron Jackson ------------------------------------ Ron Jackson, an individual /s/ George Milton ------------------------------------ George Milton, an individual /s/ John Thompson ------------------------------------ John Thompson, an individual /s/ George Papageorghiou ------------------------------------ George Papageorghiou, an individual /s/ Hugh Dunn ------------------------------------ Hugh Dunn, an individual /s/ Michael Tindall ------------------------------------ Michael Tindall, an individual /s/ Richard Charles ------------------------------------ Richard Charles, an individual /s/ Steven Pringle ------------------------------------ Steven Pringle, an individual /s/ Mats Hoberg ------------------------------------ Mats Hoberg, an individual /s/ Gerd Kunath ------------------------------------ Gerd Kunath, an individual /s/ Philip Brown ------------------------------------ Philip Brown, an individual /s/ Wolfgang Hollerman ------------------------------------ Wolfgang Hollerman as attorney for James Hill, an individual [signature page continues] /s/ Thomas Peikert ------------------------------------ Thomas Peikert, an individual /s/ Olaf Tauschke ------------------------------------ Olaf Tauschke, an individual /s/ Ricky Lam ------------------------------------ Ricky Lam, an individual /s/ Gil Cruz ------------------------------------ Gil Cruz, an individual /s/ Helmut Volquarts ------------------------------------ Helmut Volquarts, an individual /s/ Mykell Lee ------------------------------------ Mykell Lee, an individual /s/ Wilfred Toedter ------------------------------------ Wilfred Toedter, an individual /s/ Terry Clarke ------------------------------------ Terry Clarke, an individual /s/ Ken Batko ------------------------------------ Ken Batko, an individual /s/ Brian Gallagher ------------------------------------ Brian Gallagher, an individual /s/ Jeff Conry ------------------------------------ Jeff Conry, an individual /s/ Fred Landgraf ------------------------------------ Fred Landgraf, an individual [signature page continues] /s/ Thomas E. Hickey ------------------------------------ Thomas E. Hickey, an individual /s/ Chris Callas ------------------------------------ Chris Callas, an individual /s/ Dan Moore ------------------------------------ Dan Moore, an individual /s/ Eric Ramsay ------------------------------------ Eric Ramsay, an individual [signature page continues] EX-10.25 7 EXHIBIT 10.25 EXHIBIT 10.25 AMENDMENT NO. 1 This Amendment No. 1 (this "Amendment") dated as of December 12, 1997 is entered into with reference to the AMENDED AND RESTATED LOAN AGREEMENT (the "Loan Agreement") among International Logistics Limited, a Delaware corporation (the "Company"), Matrix International Logistics, Inc., a Delaware corporation, LEP Profit International, Inc. a Delaware corporation, The Bekins Company, a Delaware corporation, ILLCAN, Inc., a Delaware corporation, and ILLSCOT, Inc., a Delaware corporation (collectively, the Domestic Borrowers"), LEP International Limited, a company organized under the Laws of England ("LEP UK" and collectively with the Domestic Borrowers, "Borrowers"), and ING (U.S.) Capital Corporation ("ING Capital") as sole Lender and as Administrative Agent, and ING Bank, N.V. (London, England Branch), as facilitator of the UK Commitment (and not as a "Lender"). RECITALS A. The Borrowers jointly desire to designate Bekins Van Lines Company, a Nebraska corporation ("BVL"), as an additional Domestic Borrower under the Loan Agreement. B. The parties desire to make certain technical amendments to the Loan Agreement as set forth herein. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. DEFINITIONS. Capitalized terms used in this Amendment are used with the meanings set forth for those terms in the Loan Agreement. 2. REVISED DEFINITIONS. Section 1.1 of the Loan Agreement is amended so that the following definitions read in full as follows (or, in the case of the definition of "Permitted Encumbrances," the effected portion thereof): "ISSUING LENDER" means (a) in the case of Domestic Letters of Credit, ING Capital or a WILLING Lender or other financial institution designated by ING Capital, and (b) in the case of UK Letters of Credit, ING UK. "PERMITTED ENCUMBRANCES" means: (a) statutory Liens incident to construction or maintenance of real property, or Liens incident to CONSTRUCTION or maintenance of real property, now or hereafter filed of record for which adequate accounting reserves have been set aside and -1- which are being contested in good faith by appropriate proceedings and have not proceeded to judgment, PROVIDED that, by reason of nonpayment of the obligations secured by such Liens, no material PORTION OF such real property is subject to an imminent risk of loss or forfeiture prior to judgment ... [with the balance of such definition unamended] "SOLVENT" means as to any Person shall mean that (a) the sum of the assets of such Person, both at a fair valuation and at present fair salable value, will exceed its liabilities, including contingent liabilities, (b) such Person will have sufficient capital with which to conduct its business as presently conducted and as proposed to be conducted and (c) such Person has not incurred debts, and does not intend to incur debts, beyond its ability to pay such debts as they mature. For purposes of this definition, "debt" means any liability on a claim, and "claim" means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y) a RIGHT to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability. 3. MINIMUM AVAILABILITY AND COLLECTIONS. Section 4.2(b) of the Loan Agreement is hereby amended to read in full as follows: "(b) UNLESS LENDERS HOLDING PRO RATA SHARES EQUAL TO 66 2/3% OF THE COMMITMENTS OTHERWISE CONSENT, all collected funds contained in the Domestic Concentration Account shall be applied, on a daily basis, to the Obligations under the Domestic Commitment, PROVIDED THAT if, as of any date of determination, (i) no Default or Event of Default has then occurred and remains continuing, and (ii) Minimum Availability is not less than $20,000,000 then the collected funds shall not be so applied, and the Administrative Agent shall remit any or all such funds to an account designated by the Company and the Domestic Borrowers." 4. PAYMENT OF SUBORDINATED OBLIGATIONS. Section 7.3 of the Loan Agreement is hereby amended to read in full as follows: -2- "7.3 PAYMENT OF SUBORDINATED OBLIGATIONS. UNLESS ALL OF THE LENDERS OTHERWISE CONSENT, pay any principal (including sinking fund payments), interest or any other amount with respect to any Subordinated Obligation, or purchase or redeem (or make, or become obligated to make, any offer to purchase or redeem) any Subordinated Obligation, EXCEPT payment of interest in accordance with the terms of any Subordinated Obligation; PROVIDED, however, that during any period in which an Event of Default is then continuing, no such payment of interest shall be made prior to the expiration of the maximum period of interest blockage provided for under the terms of that Subordinated Obligation." 5. CORRECTION TO CONDITIONS PRECEDENT. The list of cross references to other Sections set forth in Section 9.3(a) of the Loan Agreement is hereby amended to read in full as follows: "(a) except as disclosed by the Company and approved in writing by the Majority Lenders, the representations and warranties contained in Article V (OTHER THAN Sections 5.5(a), 5,5(b) , 5.7 (first sentence), 5.8, 5.9, 5.11, 5.14, 5.15 and 5.19) shall be true and correct on and as of the date of the Advance or the issuance of the Letter of Credit as though made on that date;" The forms of the Request for Loan and Request for Letter of Credit attached to the Loan Agreement shall be deemed similarly amended. 1. AGENT'S RIGHTS. Section 10.2(d) of the Loan Agreement is hereby amended to read in full as follows: "(d) The Administrative Agent shall [[THE WORD "NOT" DELETED HERE]] have the right, in its sole discretion, to determine which rights, Liens or remedies it shall at any time pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of them or any of the Lenders' rights hereunder; and any moneys, deposits, receivables, balances or other property which may come into any Lender's or the Administrative Agent's possession at any time or in any manner, may be retained by such Lender or the Administrative Agent and applied to any of the Obligations as provided under any of the Loan Documents or as provided under applicable law." [bracketed text added for the convenience of the reader only, and not deemed a part of the operative language] -3- 2. REMOVAL OF ADMINISTRATIVE AGENT FOR CAUSE. The first paragraph of Section 11.8 of the Loan Agreement is hereby amended to read in full as follows: "11.8 SUCCESSOR ADMINISTRATIVE AGENT. If the Administrative Agent determines that for it to continue as Administrative Agent would result in a conflict of interest, or would create an unacceptable risk of significant liability of the Administrative Agent or to a third party, or would otherwise be inadvisable under prevailing standards of banking prudence, it may resign as such at any time upon prior written notice to the Company and the Lenders, to be effective upon a successor's acceptance of appointment as Administrative Agent. The Administrative Agent may also resign as such absent such a determination by it with the consent of the Company, which shall not be unreasonably withheld, to be likewise effective. THE ADMINISTRATIVE AGENT SHALL ALSO RESIGN UPON REQUEST BY LENDERS HOLDING PRO RATA SHARES EQUAL TO 66 2/3% OF THE COMMITMENTS FOR GOOD CAUSE." 6. AMENDMENTS TO ADVANCE RATES. Section 12.2 of the Loan Agreement is hereby amended to add thereto a new clause (e) (augmenting the list of items requiring unanimous Lender approval set forth therein), to read in full as follows: "(e) To increase the percentage advance rates set forth in the definitions of "Domestic Borrowing Base" and "UK Borrowing Base"." 3. ASSIGNMENTS OF NOTES TO FEDERAL RESERVE BANK AS COLLATERAL. Section 12.8(a) of the Loan Agreement is hereby amended by adding the following sentence to the end of such Section: "Any Lender may at any time pledge its Note or any other instrument evidencing its rights as a Lender under this Agreement to a Federal Reserve Bank, but no such pledge shall release that Lender from its obligations hereunder or grant to such Federal Reserve Bank the rights of a Lender hereunder absent foreclosure of such pledge." 7. TECHNICAL CORRECTION TO ASSIGNMENT SECTION. Section 12.8(b) of the Loan Agreement is hereby amended to read in full as follows: "(b) Any Lender may assign all or any portion of its Pro Rata Share to a bank or other financial institution reasonably acceptable to the Administrative Agent [[the requirement of the consent of the Borrowers" being deleted here]]; PROVIDED that: -4- (i) such assignment shall be evidenced by a Commitment Assignment and Acceptance; (ii) such assignment (except to an assignee which is then a Lender) shall be in a minimum amount of $10,000,000 and in integral multiples of $1,000,000 thereafter, and shall be in a proportionate share of both Commitments; (iii) such assignee has a minimum net worth of $200,000,000; (iv) the Administrative Agent consents to such assignment and has received the payment of an assignment fee from such assignee (for its sole account) of $3500; and (v) unless an Event of Default has occurred and remains continuing, the Company consents to such assignment (such consent not to be unreasonably withheld)." [balance of Section 11.8(b) unchanged] 8. JOINDER AND ASSUMPTION BY BEKINS VAN LINES; TERMINATION OF THE BEKINS COMPANY AS A BORROWER. By this Amendment, each of the existing Borrowers (a) consents to the termination of The Bekins Company's status as a Borrower under the Loan Agreement, and (b) designates BVL as an additional Domestic Borrower under the Agreement in lieu of The Bekins Company. BVL hereby joins in the Loan Agreement as an additional Domestic Borrower, and joins in and assumes each of the representations, warranties and covenants applicable to the other Domestic Borrowers, and will be subject to the other terms, conditions, and duties applicable to the other Domestic Borrowers. Without limitation on the foregoing, BVL and each other Borrower agrees that: (a) BVL shall be obligated with respect to the Obligations under the Domestic Commitment as a joint and several co-borrower, and not merely as a surety; (b) the Domestic Borrowing Base for The Bekins Company and BVL shall be jointly reported as a single Borrowing Base (which shall limit the advances to both such Persons in accordance with the terms of the Loan Agreement). 9. AGREEMENT RE EXPENSES AND CERTAIN NOTICES. For the avoidance of doubt, the Administrative Agent hereby agrees that (a) no Lender shall be responsible to the Administrative Agent under Section 11.7 for any of the Administrative Agent's negotiation, execution and delivery of the Loan Documents prior to the effective date of this Amendment, (b) the Administrative Agent shall promptly provide to each Lender a copy of each Borrowing Base Certificate and Compliance Certificate which it receives from time to time pursuant to the Loan Agreement, and -5- (c) the Administrative Agent shall provide prompt notice to each other Lender of the receipt of each Request for Loan and each Request for Letter of Credit. 10. REPRESENTATION. Borrowers represent and warrant that no Default or Event of Default has occurred and remains continuing. 11. CONDITIONS PRECEDENT. The following shall be conditions precedent to the effectiveness of this Amendment: (a) Each of the guarantors of the obligations of Borrowers under this Agreement shall have consented hereto in writing. (b) The syndication of the Obligations to the Lenders described on Schedule 1.1 hereto shall be in a position to be concurrently consummated, and each of the Domestic Borrowers (including BVL) shall have executed new promissory notes in favor of the Lenders described therein. -6- 12. CONFIRMATION. This Amendment is one of the Loan Documents. Borrowers confirm that, except to the extent expressly modified hereby, the terms of the Loan Documents are hereby confirmed. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above by their duly authorized representatives. INTERNATIONAL LOGISTICS LIMITED By: ------------------------------ Terry G. Clarke, Treasurer THE BEKINS COMPANY MATRIX INTERNATIONAL LOGISTICS, INC. ILLCAN, INC. ILLSCOT, INC. LEP PROFIT INTERNATIONAL, INC. and LEP INTERNATIONAL LIMITED By: ------------------------------ Terry G. Clarke, Assistant Treasurer of each of the foregoing BEKINS VAN LINES COMPANY By: ------------------------------ Title: ------------------------------ LENDERS: ING (U.S.) CAPITAL CORPORATION, individually and as Administrative Agent By: ------------------------------ Michael W. Adler, Senior Vice President -7- ING BANK, N.V. (London Branch), as primary lender under the UK Commitment but not as a "Lender" By: ------------------------------ Richard Kirby, Director - Banking By: ------------------------------ N.J. Marchant Manager, Lending Risk Management The undersigned hereby confirm that their guarantees of the Obligations under the Loan Agreement described above remain in full force and effect, and relate to and guarantee (in addition to the other guaranteed obligations described therein) the obligations of Bekins Van Lines Company as a Domestic Borrower under the Loan Agreement. LIW HOLDINGS CORP. LEP INTERNATIONAL CO. LEP FAIRS, INC. BAY AREA MATRIX, INC. L.A. MATRIX, INC. SOUTHWEST MATRIX, INC. and MATRIX CT, INC. By: ------------------------------ Terry G. Clarke Assistant Treasurer of each of the foregoing -8- EX-10.26 8 EXHIBIT 10.26 EXHIBIT 10.26 AMENDMENT NO. 2 This Amendment No. 2 (this "Amendment") dated as of July 10, 1998 is entered into with reference to the AMENDED AND RESTATED LOAN AGREEMENT (as previously amended by an Amendment No. 1 dated December 12, 1997, the "Loan Agreement") among GeoLogistics Corporation, a Delaware corporation (acting under its former name, "International Logistics Limited", and referred to herein as the "Company"), Matrix International Logistics, Inc., a Delaware corporation, LEP Profit International, Inc. a Delaware corporation, The Bekins Company, a Delaware corporation, ILLCAN, Inc., a Delaware corporation, and ILLSCOT, Inc., a Delaware corporation (collectively, the Domestic Borrowers"), LEP International Limited, a company organized under the Laws of England ("LEP UK" and collectively with the Domestic Borrowers, "Borrowers"), and ING (U.S.) Capital Corporation ("ING Capital") as sole initial Lender and as Administrative Agent, and ING Bank, N.V. (London, England Branch), as facilitator of the UK Commitment (and not as a "Lender"). Pursuant to Amendment No. 1, the Borrowers have designated Bekins Van Lines Company, a Nebraska corporation ("BVL"), as an additional Domestic Borrower under the Loan Agreement. RECITALS A. The Borrowers propose to acquire substantially all of the assets of Caribbean Air Services, Inc., a Delaware corporation ("CAS"), through GeoLogistics Americas, Inc. (f/k/a LEP Profit International, Inc.) pursuant to the CAS Purchase Agreement described below, and to finance a portion of the purchase price for CAS by means of the CAS Notes described below. B. The Lenders are willing to amend the Loan Agreement to accommodate the acquisition of CAS as set forth herein. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. DEFINITIONS. Capitalized terms used in this Amendment are used with the meanings set forth for those terms in the Loan Agreement. 2. REVISED DEFINITIONS. Section 1.1 of the Loan Agreement is amended so that the following definitions read in full as follows: -1- "CAS NOTES" means the $15,000,000 senior unsecured notes issued by the Company to ING (U.S.) Capital Corporation to finance the acquisition to be made under the CAS Purchase Agreement, and any refinancings thereof which do not increase the principal amount so refinanced. "CAS PURCHASE AGREEMENT" means that certain Asset Purchase Agreement dated as of June 15, 1998 among Caribbean Air Services, Inc., a Delaware corporation, Amertranz Worldwide Holding Corp., a Delaware corporation and the Company, as in effect on June 15, 1998. 3. INDEBTEDNESS AND CONTINGENT OBLIGATIONS. Section 7.12 of the Loan Agreement is hereby amended by adding thereto a new clause (m), to read in full as follows: "(m) the CAS Notes issued by the Company in an aggregate principal amount not to exceed $15,000,000 on an unsecured basis, and Contingent Obligations consisting of unsecured guarantees thereof executed by each Subsidiary of the Company which has executed the Guaranties of the Domestic Commitment, provided that the terms thereof are no more favorable to the holders of the CAS Notes than the terms of such Guaranties of the Domestic Commitment." 4. CONSENT TO PREFERRED STOCK ISSUANCE. The Lenders agree that the issuance by the Company of approximately $15,000,000 of its Series A Participating Preferred Stock to the Sponsors (plus the amount of any additional such stock issued pursuant to preemptive rights held by others), substantially in the manner contemplated by the Summary of Terms attached hereto as Exhibit A, shall not be deemed to violate the Transactions with Affiliates covenant contained in Section 7.14 of the Loan Agreement. 5. CONFIRMATION OF PARTICIPATION AGREEMENT. Each of the Lenders confirms that the Participation Agreement remains in full force and effect and applies to the Loan Agreement, as amended hereby. 6. REPRESENTATION. Borrowers represent and warrant that no Default or Event of Default has occurred and remains continuing. 7. CONDITIONS PRECEDENT. The following shall be conditions precedent to the effectiveness of this Amendment: -2- (a) Each of the guarantors of the obligations of Borrowers under this Agreement shall have consented hereto in writing. (b) The Company shall have delivered certified copies of the CAS Notes and CAS Purchase Agreement to each Lender, the form of which shall be reasonably acceptable to the Lenders. (c) The Agent shall have received written consents to its execution and delivery of this Amendment from the Requisite Lenders. 8. CONFIRMATION. This Amendment is one of the Loan Documents. Borrowers confirm that, except to the extent expressly modified hereby, the terms of the Loan Documents are hereby confirmed. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above by their duly authorized representatives. GEOLOGISTICS CORPORATION By: ------------------------------ Terry G. Clarke, Treasurer -3- THE BEKINS COMPANY MATRIX INTERNATIONAL LOGISTICS, INC. ILLCAN, INC. ILLSCOT, INC. GEOLOGISTICS AMERICAS, INC. (formerly LEP Profit International, Inc.) and LEP INTERNATIONAL LIMITED By: ------------------------------ Terry G. Clarke, Assistant Treasurer of each of the foregoing BEKINS VAN LINES COMPANY By: ------------------------------ Title: ----------------------------- LENDERS: ING (U.S.) CAPITAL CORPORATION, individually and as Administrative Agent By: ------------------------------ Michael W. Adler, Managing Director -4- ING BANK, N.V. (London Branch), as primary lender under the UK Commitment but not as a "Lender" By: ------------------------------ Richard Kirby, Director - Banking By: ------------------------------ N.J. Marchant Manager, Lending Risk Management The undersigned hereby consent to the foregoing amendment and confirm that their guarantees of the Obligations under the Loan Agreement described above remain in full force and effect. LIW HOLDINGS CORP. LEP INTERNATIONAL CO. LEP FAIRS, INC. BAY AREA MATRIX, INC. L.A. MATRIX, INC. SOUTHWEST MATRIX, INC. and MATRIX CT, INC. By: ------------------------------ Terry G. Clarke Assistant Treasurer of each of the foregoing -5- The undersigned hereby consents to the foregoing amendment and confirm that their guaranty of the Obligations under the Loan Agreement described above remain in full force and effect. AIR FREIGHT CONSOLIDATORS INTERNATIONAL, INC. By: ------------------------------ Title: ------------------------------ -6- CONSENT OF LENDER Reference is made to the AMENDED AND RESTATED LOAN AGREEMENT (as previously amended by an Amendment No. 1 dated December 12, 1997, the "Loan Agreement") among GeoLogistics Corporation, a Delaware corporation (acting under its former name, "International Logistics Limited", and referred to herein as the "Company"), Matrix International Logistics, Inc., a Delaware corporation, LEP Profit International, Inc. a Delaware corporation, The Bekins Company, a Delaware corporation, ILLCAN, Inc., a Delaware corporation, and ILLSCOT, Inc., a Delaware corporation (collectively, the Domestic Borrowers"), LEP International Limited, a company organized under the Laws of England ("LEP UK" and collectively with the Domestic Borrowers, "Borrowers"), and ING (U.S.) Capital Corporation ("ING Capital") as sole initial Lender and as Administrative Agent, and ING Bank, N.V. (London, England Branch), as facilitator of the UK Commitment (and not as a "Lender"). Pursuant to Amendment No. 1, the Borrowers have designated Bekins Van Lines Company, a Nebraska corporation ("BVL"), as an additional Domestic Borrower under the Loan Agreement. The undersigned Lender hereby consents to the execution, delivery and performance of the Amendment No. 2 to the Loan Agreement, substantially in the form presented to the undersigned as a draft. -------------------------- Name of Lender By: ----------------------- Title: ---------------------- Date: , 1998 -------------- -7- EX-10.27 9 EXHIBIT 10.27 EXECUTION EXHIBIT 10.27 CREDIT AGREEMENT DATED AS OF JULY 10, 1998 BY AND AMONG GEOLOGISTICS CORPORATION, AS BORROWER ING (U.S.) CAPITAL CORPORATION, AS ADMINISTRATIVE AGENT AND THE LENDERS PARTY HERETO TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . . . 1 1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . 25 1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . 25 1.4 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . 26 1.5 Miscellaneous Terms. . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE II THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.1 The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ARTICLE III PAYMENTS AND FEES . . . . . . . . . . . . . . . . . . . . . . 29 3.1 Principal and Interest.. . . . . . . . . . . . . . . . . . . . . 29 3.2 Upfront Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.3 Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . 30 3.4 Computation of Interest and Fees . . . . . . . . . . . . . . . . 34 3.5 Manner and Treatment of Payments . . . . . . . . . . . . . . . . 34 3.6 Failure to Charge Not Subsequent Waiver. . . . . . . . . . . . . 36 3.7 Administrative Agent's Right to Assume Payments Will Be Made by the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 36 3.8 Fee and Cost Determination Detail. . . . . . . . . . . . . . . . 37 3.9 Survivability. . . . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 38 4.1 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.2 Existence and Qualification, Power, Compliance with Laws. . . . 38 4.3 Authority; Compliance with Other Agreements and Instruments and Government Regulations . . . . . . . . . . . . . . . . . . . . . 39 4.4 No Governmental Approvals Required . . . . . . . . . . . . . . . 39 4.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 41 4.7 No Other Liabilities; No Material Adverse Effect.. . . . . . . . 41 4.8 Title to Property. . . . . . . . . . . . . . . . . . . . . . . . 41 -i- 4.9 Intangible Assets. . . . . . . . . . . . . . . . . . . . . . . . 41 4.10 Governmental Regulation. . . . . . . . . . . . . . . . . . . . . 42 4.11 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . 42 4.12 Binding Obligations. . . . . . . . . . . . . . . . . . . . . . . 42 4.13 No Default.. . . . . . . . . . . . . . . . . . . . . . . . . . . 42 4.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 4.15 Regulations T, U and X . . . . . . . . . . . . . . . . . . . . . 44 4.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 4.17 Tax Liability. . . . . . . . . . . . . . . . . . . . . . . . . . 44 4.18 Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4.19 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . 45 4.20 Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . 46 4.21 Labor Disputes. . . . . . . . . . . . . . . . . . . . . . . . . 46 ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 5.1 Payment of Notes.. . . . . . . . . . . . . . . . . . . . . . . . 47 5.2 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 47 5.3 Limitation on Indebtedness.. . . . . . . . . . . . . . . . . . . 47 5.4 Limitations on Restricted Payments.. . . . . . . . . . . . . . . 49 5.5 Limitation on Distributions from Restricted Subsidiaries . . . . 52 5.6 Limitation on Sales of Assets and Subsidiary Stock . . . . . . . 53 5.7 Limitation on Transactions with Affiliates . . . . . . . . . . . 54 5.8 Compliance Certificates. . . . . . . . . . . . . . . . . . . . . 56 5.9 Further Instruments and Acts . . . . . . . . . . . . . . . . . . 56 5.10 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . 56 5.11 Limitation on Sale\Leaseback Transactions. . . . . . . . . . . . 58 5.13 Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . 58 5.14 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . 58 5.15 Future Guarantors. . . . . . . . . . . . . . . . . . . . . . . . 59 5.16 Merger, Consolidation and Sale of Assets . . . . . . . . . . . . 59 ARTICLE VI CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 62 6.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT . . . . . 65 7.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 65 -ii- 7.2 Remedies upon Event of Default . . . . . . . . . . . . . . . . . 66 ARTICLE VIII THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . 69 8.1 Appointment and Authorization. . . . . . . . . . . . . . . . . . 69 8.2 Administrative Agent and Affiliates. . . . . . . . . . . . . . . 69 8.3 Proportionate Interest of the Lenders in Any Collateral. . . . . 69 8.4 Lenders' Credit Decisions. . . . . . . . . . . . . . . . . . . . 70 8.5 Action by Administrative Agent . . . . . . . . . . . . . . . . . 70 8.6 Liability of Administrative Agent. . . . . . . . . . . . . . . . 71 8.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 72 8.8 Successor Administrative Agent . . . . . . . . . . . . . . . . . 73 8.9 No Obligations of the Company. . . . . . . . . . . . . . . . . . 74 ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 75 9.1 Cumulative Remedies: No Waiver . . . . . . . . . . . . . . . . . 75 9.2 Amendment: Consents. . . . . . . . . . . . . . . . . . . . . . . 75 9.3 Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . . . . 76 9.4 Nature of Lenders' Obligations . . . . . . . . . . . . . . . . . 77 9.5 Survival of Representations and Warranties . . . . . . . . . . . 77 9.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 9.7 Execution of Loan Documents. . . . . . . . . . . . . . . . . . . 78 9.8 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . 78 9.9 Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . . 81 9.10 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 9.11 Nonliability of the Lenders. . . . . . . . . . . . . . . . . . . 84 9.12 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . 85 9.13 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 85 9.14 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . 86 9.15 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 87 9.16 Severability of Provisions . . . . . . . . . . . . . . . . . . . 87 9.17 Independent Representations, Warranties, and Covenants . . . . . 87 9.18 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 9.19 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . 87 9.20 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . 87 9.21 Purported Oral Amendments. . . . . . . . . . . . . . . . . . . . 88 9.22 Replacement of a Lender. . . . . . . . . . . . . . . . . . . . . 88 9.23 Waiver of Right to Trial by Jury . . . . . . . . . . . . . . . . 88
-iii- EXHIBITS Exhibit A Assignment and Acceptance Exhibit B Compliance Certificate Exhibit C Form of Notes Exhibit D Pricing Designation
SCHEDULES 4.5 Subsidiaries and Other Investments 4.7 Other Liabilities 4.9 Intangible Assets 4.11 Litigation 4.14 ERISA 4.18 Projections 4.19 Labor Matters 4.20 Hazardous Materials 4.21 Labor Disputes
-iv- CREDIT AGREEMENT Dated as of July 10, 1998 This CREDIT AGREEMENT ("Agreement") is entered into by and among GeoLogistics Corporation, a Delaware corporation (the "Company"), ING (U.S.) Capital Corporation ("ING Capital") and each other lender whose name is set forth on the signature pages hereof or which may hereafter execute and deliver an instrument of assignment with respect to this Agreement pursuant to Section 9.8 (collectively, the "Lenders" and, individually, a "Lender"), and ING Capital, as Administrative Agent. In consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.1 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below: "ADDITIONAL ASSETS" means (i) any property or assets (other than Indebtedness and Capital Stock) in a business related to, ancillary to or complementary to the business of the Company as of the Senior Note Issue Date (a "Related Business"), (ii) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary or (iii) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary; PROVIDED, HOWEVER, that, any such Restricted Subsidiary described in clause (ii) or (iii) above is primarily engaged in a Related Business. "ADMINISTRATIVE AGENT" means ING Capital, when acting in its capacity as the Administrative Agent under any of the Loan Documents, and any successor Administrative Agent. "ADMINISTRATIVE AGENT'S OFFICE" means the Administrative Agent's address as set forth on the signature pages of this Agreement, or such other address as the Administrative Agent may designate by written notice to the Company and the Lenders. -1- "AFFILIATE" means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (and the correlative terms "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise); PROVIDED that, in any event, any Person that owns, directly or indirectly, 10% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation that has more than 100 record owners, or 10% or more of the partnership or other ownership interests of any other Person that has more than 100 record owners, will be deemed to control such corporation or other Person. "AGENT'S LETTER" means the letter agreement dated as of the Closing Date between the Company and the Administrative Agent. "AGREEMENT" means this Credit Agreement, either as originally executed or as it may from time to time be supplemented, modified, amended, restated or extended. "ASSET DISPOSITION" means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger or consolidation (each referred to for the purposes of this definition as a "disposition"), of (i) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable Law to be held by a Person other than the Company or a Restricted Subsidiary), (ii) all or substantially all the assets (other the Capital Stock of an Unrestricted Subsidiary) of any division or line of business of the Company or any Restricted Subsidiary or (iii) any other assets (other than Capital Stock of an Unrestricted Subsidiary) of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary (other than, in the case of (i), (ii) and (iii) above, (x) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary and (y) for purposes of Section 5.6 only, a disposition that constitutes a Restricted Payment permitted by Section 5.4 or a disposition specifically excepted form the definition of Restricted Payment) PROVIDED, HOWEVER, that Asset Disposition shall not include (a) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration less than or equal to $1,000,000, (b) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company to the -2- extent permitted hereby, or (c) the disposition of assets of the Company or any Restricted Subsidiary for aggregate non-cash consideration not in excess of $20,000,000 so long as the pro forma Consolidated Coverage Ratio after giving effect to any such disposition is at least 2.5 to 1.0. The foregoing shall not apply to any Lien granted on the Capital Stock of a Restricted Subsidiary. "ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the stated interest rate of the Senior Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "BANK CREDIT AGREEMENT" means the Amended and Restated Loan Agreement dated as of October 28, 1997 among the Company, Matrix International Logistics, Inc., a Delaware corporation, LEP Profit International, Inc. a Delaware corporation, The Bekins Company, a Delaware corporation, ILLCAN, Inc., a Delaware corporation, and ILLSCOT, Inc., a Delaware corporation (collectively, the Domestic Borrowers"), LEP International Limited, a company organized under the Laws of England ("LEP UK" and collectively with the Domestic Borrowers, "Borrowers"), the Lenders therein named, ING (U.S.) Capital Corporation, as Administrative Agent, and ING Bank, N.V., as heretofore amended, as such agreement, in whole or in part, may hereafter be further amended, renewed, extended, increased, substituted, refinanced, restructured, replaced (including, without limitation, any successive renewals, extensions, increases, substitutions, refinancings, restructurings, replacements, supplements or other modifications of the foregoing). "BANK CREDIT AGREEMENT SCHEDULES" means the Schedules to the Bank Credit Agreement, as originally executed. "BASE RATE" means the arithmetic average of the rates of interest publicly announced by The Chase Manhattan Bank, Citibank, N.A. and Morgan Guaranty Trust Company of New York (or their respective successors) as their respective prime commercial lending rates (or, as to any such bank that does not announce such a rate, such bank's "base" or other rate determined by the Administrative Agent to be the equivalent rate announced by such bank), except that, if any such bank shall, for any period, cease to announce publicly its prime commercial lending (or equivalent) rate, the Administrative Agent shall, during such period, determine the "Prime Rate" based upon -3- the prime commercial lending (or equivalent) rates announced publicly by the other such banks. "BASE RATE TRANCHE" means a portion of the Loan as to which interest is calculated with reference to the Base Rate. "BEST KNOWLEDGE" means, where it modifies a statement that, after reasonable inquiry, nothing has come to the attention of any Senior Officer of the Company or any relevant Restricted Subsidiary which would render the statement incorrect or misleading in any respect. "BOARD OF DIRECTORS" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board. "BREAKAGE FEE" means the fee set forth in Section 3.3(g) hereof. "BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday or Friday, OTHER THAN a day on which banks are authorized or required to be closed in New York, Los Angeles or Chicago or a day on which any of the Lenders' relevant U.S. offices are closed. "CANADIAN SUBSIDIARY" means any Subsidiary of the Company which is incorporated or continued under the laws of Canada or any province of Canada. "CAPITAL LEASE" means, as to any Person, a lease of any Property by that Person as lessee that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or, if such Statement is not then in effect, such other statement of GAAP as may be applicable, recorded as a "capital lease" on the balance sheet of that Person prepared in accordance with GAAP. "CAPITAL LEASE OBLIGATIONS" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. -4- "CAPITAL STOCK" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designed) equity of such person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "CARIBBEAN AIR SERVICES" means Caribbean Air Services, Inc., a Delaware corporation, its successors and permitted assigns. "CAS PURCHASE AGREEMENT" means that certain Asset Purchase Agreement dated as of June 15, 1998 among Caribbean Air Services, Inc., a Delaware corporation, Amertranz Worldwide Holding Corp., a Delaware corporation and the Company, as in effect on June 15, 1998. "CASH" means, when used in connection with any Person, all monetary and nonmonetary items owned by that Person that are treated as cash in accordance with GAAP. "CERTIFICATE OF A RESPONSIBLE OFFICIAL" means a certificate signed by a Responsible Official of the Person providing the certificate. "CHANGE OF CONTROL EVENT" means the occurrence of (a) any "Change of Control Event" as defined in the Bank Credit Agreement or (b) any other event or circumstance involving a change in the ownership, management, or board of directors of the Company the occurrence of which (i) entitles the holders of Indebtedness under the Bank Credit Agreement, or any other Indebtedness of the Company in an amount which is in excess of $50,000,000 which has directly or indirectly refinanced the Bank Credit Agreement, to require (whether immediately or following the passage of time) the repayment of such Indebtedness, or (ii) requires the Company to make an offer to purchase the Senior Notes. "CLOSING DATE" means the date upon which the conditions set forth in Section 6.1 are satisfied and the Loan is made. "CODE" means the Internal Revenue Code of 1986, as amended or replaced and as in effect from time to time. "COMMISSION" means the Securities and Exchange Commission. -5- "ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance substantially in the form of Exhibit A. "COMPLIANCE CERTIFICATE" means a certificate in the form of Exhibit B, properly completed and signed by a Senior Officer of the Company. "CONSOLIDATED COVERAGE RATIO" as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days (or, if less than 45 days after the end of such fiscal quarter, ending as of the date the consolidated financial statements of the Company shall be available) prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; PROVIDED, HOWEVER, that (1) if the Company or any Restricted Subsidiary (x) has Incurred any Indebtedness (other than Indebtedness Incurred for working capital purposes under a Bank Credit Agreement) since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period or (y) has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination, or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility shall be computed based upon the average daily balance of such Indebtedness during such four quarter period), (2) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest -6- Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale), (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction requiring a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period or (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition, Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Responsible Official of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). "CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the Company or its Restricted Subsidiaries, (i) interest expense attributable to Capital Lease Obligations, -7- (ii) amortization of debt discount and debt issuance costs, (iii) capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) net costs associated with Hedging Obligations (including amortization of fees), (vii) dividends paid or payable in respect of any Disqualified Stock of the Company, (viii) cash dividends paid or payable by the Company and all dividends paid or payable by Restricted Subsidiaries, in each case in respect of all Preferred Stock held by Persons other than the Company or a Wholly Owned Subsidiary, (ix) interest incurred in connection with Investments in discontinued operations and (x) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by the Company or any Restricted Subsidiary. "CONSOLIDATED NET INCOME" means, for any period, the net income of the Company and its consolidated Subsidiaries; PROVIDED, HOWEVER, that there shall not be included in such Consolidated Net Income: (i) any net income of any Person if such Person is not a Restricted Subsidiary, except that (A) subject to the exclusion contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (iii) below) and (B) with respect to the calculation of EBITDA only, the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income up to the aggregate amount invested by the Company or any Restricted Subsidiary in such Person during such period; (ii) any net income (or loss) of any Person acquired by the Company or a Subsidiary of the Company in a pooling of interests transaction for any period prior to the date of such acquisition; (iii) any net income of any Restricted Subsidiary to the extent that such Restricted Subsidiary is subject to restrictions, directly or indirectly, prohibiting the payment of dividends, the repayment of intercompany debt and the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that (A) subject to the exclusion contained in clause (iv) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the Company's -8- equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income up to the aggregate amount invested by the Company or any Restricted Subsidiary in such Person during such period; (iv) any gain or loss realized upon the sale or other disposition of any assets of the Company or its consolidated Subsidiaries (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person; (v) extraordinary gains or losses; and (vi) the cumulative effect of a change in accounting principles. "CONSOLIDATED NET WORTH" means the total of the amounts shown on the balance sheet of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the most recent fiscal quarter of the Company for which financial statements are available, as (i) the par or stated value of all outstanding Capital Stock of the Company plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. "CONTINGENT OBLIGATION" means, as to any Person, any (a) direct or indirect guaranty of Indebtedness of, or other obligation performable by, any other Person, INCLUDING any endorsement (other than for collection or deposit in the ordinary course of business), co-making or sale with recourse of the obligations of any other Person or (b) contractual assurance (not arising solely by operation of Law) given to an obligee with respect to the performance of an obligation by, or the financial condition of, any other Person, whether direct, indirect or contingent, INCLUDING any purchase or repurchase agreement covering such obligation or any collateral security therefor, any agreement to provide funds (by means of loans, capital contributions or otherwise) to such other Person, any agreement to support the solvency or level of any balance sheet item to such other Person, or any other arrangement of whatever nature having the effect of assuring or holding harmless any obligee against loss with respect to any obligation of such other Person including without limitation any "keep-well", "take-or-pay" or "through-put" agreement or arrangement. The amount of any Contingent Obligation issued in support of Indebtedness shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation (unless the Contingent Obligation is limited by its terms to a lesser amount, in which case to the extent of such amount) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the Person in good faith. The amount of any other Contingent Obligation -9- shall be zero until and unless, pursuant to GAAP, an amount in respect of such Contingent Obligation is required to be included on the face of the balance sheet of such Person (and not merely as a note thereto), at which time the amount of such Contingent Obligation shall be the amount so required to be included. "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any outstanding Securities issued by that Person or of any material agreement, instrument or undertaking to which that Person is a party or by which it or any of its Property is bound. "CREDITORS" means, collectively, the Administrative Agent and each Lender. "CURRENCY AGREEMENT" means, in respect of a Person, any foreign exchange contract, currency swap arrangement or other similar agreement to which such a Person is a party or a beneficiary. "CUSTODIAN" means any receiver, Administrative Agent, assignee, liquidator, custodian or similar official under any Bankruptcy Law. "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States of America, the Bankruptcy and Insolvency Act of Canada, the Companies' Creditors Arrangement Act of Canada and the Winding-Up Act of Canada, The Insolvency Act 1986 and the Companies Act of 1985 (as amended by the Companies Act of 1989) of England and Wales), as amended from time to time, and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws, including corporation Laws, from time to time in effect affecting the rights of creditors generally. "DEFAULT" means any event that, with the giving of any applicable notice or passage of time specified in Section 7.1, or both, would be an Event of Default. "DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (other than as a result of a Change of Control Event) (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible into or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to the Maturity Date; PROVIDED, HOWEVER, that any Capital -10- Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the Maturity Date shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the provisions described under Section 5.6. "DOLLARS" or "'$" means United States dollars. "EBITDA" for any period means the sum of Consolidated Net Income plus Consolidated Interest Expense plus the following to the extent deducted in calculating such Consolidated Net Income: (a) all income tax expense of the Company, (b) depreciation expense, (c) amortization expense, and (d) all other non-cash items reducing such Consolidated Net Income (excluding any non-cash item to the extent it represents an accrual of, or reserve for, cash disbursement for any subsequent period) less all non-cash items increasing such Consolidated Net Income (such amount calculated pursuant to this clause (d) not to be less than zero), in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization of, a Subsidiary of the Company shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Consolidated Net Income. "ERISA" means the Employee Retirement Income Security Act of 1974, and any regulations issued pursuant thereto, as amended or replaced and as in effect from time to time. "ERISA AFFILIATE" means, with respect to any Person, any Person or any trade or business (whether or not incorporated) that is under common control with that Person within the meaning of Section 414(b) or (c) of the Code. "EURODOLLAR RATE" means, for any Interest Period for any Eurodollar Tranche, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the offered rate for deposits in Dollars (in the same approximate amount and having approximately the same maturity as the Eurodollar Tranche to be made) in the London interbank eurodollar market at approximately 11:00 a.m. (London time), which appears on the Telerate Screen 3750 or, if such rate does not appear on the Telerate -11- Screen, such rate as determined in good faith by the Administrative Agent, two Business Days prior to the first day of the Interest Period for such Eurodollar Tranche. "EURODOLLAR TRANCHE" means a portion of the Loan as to which interest is calculated with reference to the Eurodollar Rate. "EVENT OF DEFAULT" shall have the meaning provided in Section 7.1 "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per annum equal for each day during such period to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York, or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11 a.m. (New York time) for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. "FOREIGN CREDIT AGREEMENT" means any revolving credit agreement, invoice discounting, overdraft or guarantee facility or other similar arrangement providing for the Incurrence of Indebtedness by any Foreign Subsidiary, and the agreements governing such Indebtedness which may, in whole or in part, be amended, renewed, extended, substituted, refinanced, restructured, replaced (including, without limitation, any successive renewals, extensions, substitutions, refinancing, restructuring, replacement, supplements or other modifications of the foregoing). "FOREIGN SUBSIDIARY" means a Restricted Subsidiary that is incorporated in a jurisdiction other than the United States or a State thereof or the District of Columbia and with respect to which more than 80% of any of its sales, earnings or assets (determined on a consolidated basis in accordance with GAAP) are located in, generated from or derived from operations located in territories outside the United States of America and jurisdictions outside the United States of America. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Senior Note Issue Date, including those set forth (i) in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) in statements and -12- pronouncements of the Financial Accounting Standards Board, (iii) in such other statements by such other entity as approved by a significant segment of the accounting profession, and (iv) in the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "GOVERNMENTAL AGENCY" means any international, foreign, federal, state, provincial, county or municipal government, or political subdivision thereof, any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, any court, administrative tribunal or public utility or any arbitration tribunal or other nongovernmental authority to whose jurisdiction a Person has consented. "GUARANTOR SUBSIDIARIES" means, as of each date of determination, each of the Domestic Borrowers under the Bank Credit Agreement and each Subsidiary of the Company which has executed a guaranty of the obligations under the Bank Credit Agreement as of that date (other than LEP Canada, except to the extent required by Section 5.15(b)). "GUARANTY" means the Guaranty issued by each Guarantor Subsidiary of the obligations of the Company hereunder, executed on the Closing Date in favor of the Administrative Agent, for the benefit of the Creditors, as the same may from time to time be modified by the execution of an Instrument of Joinder in the form of Exhibit A thereto in accordance with Section 5.15, and as the same may from time to time be supplemented, modified, amended, renewed, extended or supplanted. "HAZARDOUS MATERIALS" means any pollutants, contaminants, hazardous, toxic or special wastes, substances or materials, defined or regulated as such in (or for purposes of) any environmental Law, including, without limitation, any asbestos, any petroleum (including crude oil or any fraction), any radioactive substance and any polychlorinated byphenyls; PROVIDED, in the event that any environmental Law is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment; and PROVIDED further, to the extent that the applicable Laws of the United States or Canada or any province or state establish a meaning for "hazardous material," "hazardous substance," -13- "hazardous waste," "solid waste," "contaminant," "pollutant," or "toxic substance" which is broader than that specified in any environmental Law, such broader meaning shall apply. "HAZARDOUS MATERIALS LAWS" means applicable provisions of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), any "Superfund" law, the Hazardous Materials Transportation Act, as amended, the Occupational Safety and Health Act, as amended ("OSHA"), the Hazardous Waste Control Law, California Health Safety Code, as amended, Environment Quality Act (Quebec) and regulations adopted thereunder, Transportation of Dangerous Goods Act (Canada), the Environmental Protection Act (Ontario), Transportation of Dangerous Goods Regulation (Canada), Transportation of Dangerous Substances Regulation (Quebec), Canadian Environmental Protection Act (Canada), the Environmental Act 1995, the Environmental Protection Act of 1990 and the Planning (Hazardous Substances) Act of 1990 or England and Wales, and any other applicable United States, English, Welsh or Canadian federal, state, provincial, municipal or local law, statute, rule, regulation, ordinance, order, judgement, decree, permit, license or other binding determination of any Governmental Agency, as now or at any time hereafter amended or in effect and applicable to any Party, regulating, relating to or imposing liability or standards of conduct concerning the manufacture, processing, distribution, use, treatment, handling, storage, disposal, or transportation of Hazardous Materials, or air emissions, water discharges or otherwise concerning the protection of the outdoor or indoor environment. "HEDGING OBLIGATIONS" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. "INCUR" means to issue, assume, guarantee (or otherwise incur Contingent Obligations with respect to), incur or otherwise become liable for Indebtedness; PROVIDED, HOWEVER, that any Indebtedness of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. The accretion of principal in a non-interest bearing or other discount security shall be deemed the Incurrence of Indebtedness. -14- "INDEBTEDNESS" means, as to any Person, (a) all indebtedness of such Person for borrowed money, (b) that portion of the obligations of such Person under Capital Leases that is properly recorded as a liability on a balance sheet of that Person prepared in accordance with GAAP, (c) any obligation of such Person that is evidenced by a promissory note or other instrument representing an extension of credit to such Person, whether or not for borrowed money, (d) any obligation of such Person for the deferred purchase price of Property or services (OTHER THAN trade or other accounts payable in the ordinary course of business in accordance with customary terms), (e) any obligation of such Person that is secured by a Lien on the assets of such Person, whether or not that Person has assumed such obligation and whether or not such obligation is nonrecourse to the credit of such Person, but only to the extent of the fair market value of the assets so subject to the Lien, (f) obligations of such Person arising under acceptance facilities or under facilities for the discount of accounts receivable of such Person, (g) obligations of such Person for unreimbursed draws under letters of credit issued for the account of such Person and (h) the net obligations of such Person under any swap agreement. The term "Indebtedness" excludes all obligations under operating leases, determined in accordance with GAAP. "INDENTURE" means the Indenture dated October 29, 1997 among the Company, First Trust National Association, as trustee, as in effect on the date of this Agreement. "INTANGIBLE ASSETS" means general intangibles as such term is defined in the Uniform Commercial Code. "INTEREST PERIOD" means, as to each Eurodollar Tranche, the period commencing and ending on the dates specified by the Company pursuant to Section 2.1(b), which shall be seven days, fourteen days, one, two, three or six months after the date such period commenced; PROVIDED that: (a) the first day of any Interest Period shall be a Business Day; (b) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next-succeeding Business Day; and (c) no Interest Period shall extend beyond the Maturity Date. "INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed solely to protect the Company or any Restricted Subsidiary against fluctuations in interest rates. -15- "INVESTMENT" means, when used in connection with any Person, any investment by or of that Person, whether by means of purchase or other acquisition of capital stock or other Securities of any other Person or by means of loan, advance, capital contribution, guaranty or other debt or equity participation or interest, or otherwise, in any other Person, INCLUDING any partnership and joint venture interests of such Person in any other Person. The amount of any Investment shall be the amount actually invested, without adjustment for increases or decreases in the value of such Investment. "LAWS" means, collectively, all international, foreign, federal, state, provincial and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents. "LENDERS" means each Lender which is an original signatory hereto or which hereafter becomes a party hereto in accordance with Section 9.8. "LEP CANADA" means LEP International, Co., a Nova Scotia unlimited liability company, and its successors and permitted assigns. For purposes of this Agreement, LEP Canada shall be deemed to be a Subsidiary of both ILLCAN, Inc. and ILLSCOT, Inc. "LIEN" means (whether choate or inchoate, crystallized or fixed, for amounts due or accruing) any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, lien, deemed trust, reservation, exception, easement, encroachment, title exception, garnishment or distraint right, deposit arrangement, or charge of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, affecting any Property, INCLUDING any agreement to grant any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature of a security interest and/or the filing of or agreement to give any financing statement, notice or registration (other than a precautionary financing statement with respect to a lease that is not in the nature of a security interest) under the Uniform Commercial Code. "LOAN" means the $15,000,000 loan made by the Lenders pursuant to Article II. "LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the Guaranties, and any other certificates, documents or agreements of any type or nature executed and delivered by the Company or any of its Subsidiaries to any of the Creditors -16- concurrently herewith or at any time in the future in furtherance of this Agreement, either as originally executed or as the same may from time to time be supplemented, modified, amended, restated, extended or supplanted. "MAJORITY LENDERS" means, as of any date of determination, Lenders whose aggregate Pro Rata Shares, in the aggregate, exceed 50%. "MANAGEMENT AGREEMENTS" means (i) the Management Agreement dated October 31, 1996 between William E. Simon & Sons, LLC and the Company and (ii) the Management Agreement dated as of November 1, 1997 among the Company, TCW Special Credits Fund V - The Principal Fund and Oaktree Capital Management, LLC. "MATERIAL ADVERSE EFFECT" means any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of any Loan Document, (b) is or could reasonably be expected to be material and adverse to the condition (financial or otherwise) or business operations of the Company and its Restricted Subsidiaries, taken as a whole, or the properties and assets of the Company and its Restricted Subsidiaries taken as a whole, (c) materially impairs or could reasonably be expected to materially impair the ability of the Company and its Restricted Subsidiaries, taken as a whole, to perform the Obligations, or (d) impairs or could reasonably be expected to impair the ability of the Lenders to enforce their legal remedies pursuant to the Loan Documents. "MATURITY DATE" means October 15, 2007. "MULTIEMPLOYER PLAN" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA. "NET AVAILABLE CASH" from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form) in each case net of (i) all legal, title and recording tax expenses, brokerage commissions, underwriting discounts or commissions or sales commissions and other reasonable fees and expenses (including, without limitation, fees and expenses of counsel, accountants and investment bankers) related to such Asset -17- Disposition or converting to cash any other proceeds received, and any relocation and severance expenses as a result thereof, and all Federal, state, provincial, foreign and local taxes required to be accrued or paid as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition or made in order to obtain a necessary consent to such Asset Disposition or to comply with applicable law, (iii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition and (iv) appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Disposition. Further, with respect to an Asset Disposition by a Subsidiary which is not a Wholly Owned Subsidiary, Net Available Cash shall be reduced pro rata for the portion of the equity of such Subsidiary which is not owned by the Company. "NET CASH PROCEEDS," with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. In addition, for purposes of the calculations described in Section 5.4, Net Cash Proceeds shall also mean any cash amounts paid to the Company by members of management of the Company or its Subsidiaries in respect of all promissory notes outstanding on the Senior Note Issue Date and any amounts reflected on the records of the Company as additional paid in capital or equity contributions made in respect of employment-related stock price guarantees entered into prior to the Senior Note Issue Date. "NOTES" means, collectively, any of the promissory notes made by the Company to a Lender evidencing that Lender's Pro Rata Share of the Loan, substantially in the form of Exhibit C, either as originally executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or supplanted. "OBLIGATIONS" means all present and future obligations of every kind or nature of the Company or any other Party at any time and from time to time owed to the -18- Creditors or any one or more of them under any one or more of the Loan Documents, whether due or to become due, matured or unmatured, liquidated or unliquidated or contingent or noncontingent, INCLUDING obligations of performance as well as obligations of payments and INCLUDING interest that accrues after the commencement of any proceeding under any Debtor Relief Law by or against the Company or any Party. "OPINION OF COUNSEL" means the favorable written legal opinion dated as of the Closing Date of Milbank, Tweed, Hadley & McCloy, special counsel to the Company, together with copies of all factual certificates upon which such counsel have relied. "PARTY" means any Person other than the Creditors that now or hereafter is a party to any of the Loan Documents. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereof established under ERISA. "PENSION PLAN" means any "employee pension benefit plan" that is subject to Title IV of ERISA and that is maintained for employees of the Company or any of its ERISA Affiliates, other than a Multiemployer Plan. "PERMITTED HOLDERS" means, collectively, the Sponsors and Roger E. Payton. "PERMITTED INVESTMENTS" means an Investment by the Company or any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; PROVIDED, HOWEVER, that the primary business of such Restricted Subsidiary is a Related Business; (ii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that such Persons's primary business is a Related Business; (iii) cash equivalents; (iv) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (v) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (vi) loans or advances to employees made in the ordinary -19- course of business consistent with past practices of the Company or such Restricted Subsidiary, including without limitation, loans or advances made to employees in respect of stock purchase or other employee benefit plans; (vii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owning to the Company or any Restricted Subsidiary or in satisfaction or judgments and (viii) any Person to the extent such Investment represents the non-cash portion of the consideration received for a disposition of Assets as permitted under Section 5.6 and as described in clause (c) of the definition of Asset Disposition. "PERMITTED LIENS" means, with respect to any Person, (a) pledges or deposits by such Person under workers' compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (b) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings; (c) Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review or time for appeal has not yet expired; (d) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings; (e) Liens in favor or issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; PROVIDED, HOWEVER, that such letters of credit do not constitute Indebtedness; (f) survey exceptions, encumbrances, easements or reservations of, or rights of others for licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (g) Liens securing an Interest Rate Agreement so long as the related Indebtedness is, and is permitted to be under this Agreement, secured by a Lien on the same property securing the Interest Rate Agreement; and (h) leases and subleases of real property which do not -20- interfere with the ordinary conduct of the business of such Person, and which are made on customary and usual terms applicable to similar properties. "PERMITTED RIGHT OF OTHERS" means a Right of Others consisting of (a) an interest (other than a legal or equitable co-ownership interest, an option or right to acquire a legal or equitable co-ownership interest and any interest of a ground lessor under a ground lease) that does not materially impair the value or use of property for the purposes for which it is or may reasonably be expected to be held, (b) an option or right to acquire a Lien that would be a Permitted Lien and (c) the reversionary interest of a landlord under a lease of Property. "PERSON" means any entity, whether an individual, trustee, corporation, general partnership, limited partnership, limited liability company, joint stock company, trust, estate, unincorporated organization, business association, tribe, firm, joint venture, Governmental Agency or otherwise. "PRICING DESIGNATION" means a Pricing Designation, substantially in the form of Exhibit D hereto, properly completed and signed by a Responsible Official of the Company. "PRO RATA SHARE" means, as to each Lender, the percentage interest of that Lender in the Loan. As of the Closing Date, ING Capital is the holder of a Pro Rata Share of 100%. From time to time following the Closing Date, the Pro Rata Shares of each Lender shall be subject to adjustment in connection with any assignment to which that Lender is a party in accordance with Section 9.8. "PROJECTIONS" means the financial projections attached hereto as Schedule 4.18. "PROPERTY" means any interest in any kind of property or asset, whether real, personal or mixed, movable or immovable, or tangible or intangible. "QUARTERLY PAYMENT DATE" means each March 31, June 30, September 30 and December 31, commencing with the first such date to occur subsequent to the Closing Date. -21- "REFINANCING INDEBTEDNESS" has the meaning set forth for that term in the Indenture. "REGULATIONS D, T, U AND X" means, respectively, Regulations D, T, U and X, as at any time amended, of the Board of Governors of the Federal Reserve System, or any other regulations in substance substituted therefor. "RELATED BUSINESS" means any business related, ancillary or complementary to the businesses of the Company on the Senior Note Issue Date. "REQUIREMENT OF LAW" means, as to any Person, the articles or certificate of incorporation and bylaws or other organizational or governing documents of such Person, and any Law, or judgment, award, decree, writ or determination of a Governmental Agency, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject. "RESPONSIBLE OFFICIAL" means, (a) when used with reference to a Person other than an individual, any corporate officer of such Person, general partner of such Person, corporate officer of a corporate general partner of such Person, or corporate officer of a corporate general partner of a partnership that is a general partner of such Person, or (for purposes of Articles II and III only) any other responsible official thereof duly acting on behalf thereof, and, (b) when used with reference to a Person who is an individual, such Person. Any document or certificate hereunder that is signed or executed by a Responsible Official of a Person shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of that Person. "RESTRICTED PAYMENT" with respect to any Person means (i) the declaration or payment of any dividends or any stock distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person), other than dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and dividends or distributions payable solely to the Company or a Restricted Subsidiary, and other than pro rata dividends or other distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation), (ii) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of any -22- Capital Stock of a Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary), including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of the Company that is not Disqualified Stock), (iii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying of a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition) or (iv) the making of any Investment in any Person (other than a Permitted Investment). "RESTRICTED SUBSIDIARY" means each Subsidiary of the Company which is not an Unrestricted Subsidiary. "RIGHT OF OTHERS" means, as to any Property in which a Person has an interest, (a) any legal or equitable right, title or other interest (OTHER THAN a Lien) held by any other Person in or with respect to that Property and (b) any option or right held by any other Person to acquire any right, title or other interest in or with respect to that Property, INCLUDING any option or right to acquire a Lien. "SALE/LEASEBACK TRANSACTIONS" means an arrangement relating to Property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such Property to a Person and the Company or a Restricted Subsidiary leases back such Property from such Person. "SECURITIES" means any capital stock, share, voting trust certificate, bonds, debentures, notes or other evidences of indebtedness, limited partnership interests or any warrant, option or other right to purchase or acquire any of the foregoing. "SENIOR NOTE ISSUE DATE" means October 28, 1997. "SENIOR NOTES" means the 9 3/4% Senior Notes of the Company due 2007 issued pursuant to the Indenture. "SENIOR OFFICER" means the (a) chief executive officer, (b) chief operating officer, (c) chief financial officer or (d) president, vice-president or treasurer of the Person designated. -23- "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission. "SOLVENT" as to any Person shall mean that (a) the sum of the assets of such Person, both at a fair valuation and at present fair salable value, will exceed its liabilities, including contingent liabilities, (b) such Person will have sufficient capital with which to conduct its business as presently conducted and as proposed to be conducted and (c) such Person has not incurred debts, and does not intend to incur debts, beyond its ability to pay such debts as they mature. For purposes of this definition, "debt" means any liability on a claim, and "claim" means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y) a fight to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. With respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability. "SPONSORS" means William E. Simon & Sons, LLC, TCW Special Credits Fund V - The Principal Fund, OCM Principal Opportunities Fund, L.P. and any of their respective affiliates. "SUBORDINATED OBLIGATIONS" means (a) any Obligations and Indebtedness of the Company and its Subsidiaries under the Management Agreements, and (b) any other Indebtedness of the Company that is subordinated to the Obligations, all of the provisions of which (including amount, maturity, amortization, interest rate, covenants, defaults and subordination) have been approved in writing as to form and substance by the Administrative Agent with the consent of the Majority Lenders. "SUBSIDIARY" means, as of any date of determination and with respect to any Person, any other entity whose financial results are properly consolidated with those of that Person in accordance with GAAP or which, (a) in the case of a corporation, of which a majority of the securities having ordinary voting power for the election of directors or other governing body (other than securities having such power only by reason of the happening of a contingency) are at the time beneficially owned by such Person and/or one -24- or more Subsidiaries of such Person or, (b) in the case of a partnership or joint venture, of which such Person or a Subsidiary of such Person is a general partner or joint venturer or of which a majority of the partnership or other ownership interests are at the time beneficially owned by such Person and/or one or more of its Subsidiaries, or (c) in the case of any other type of entity, of which such Person or a Subsidiary of such Person is the beneficial owner of the majority in interest of the equity securities. "TERMINATION EVENT" means (a) a "reportable event" as defined in Section 4043 of ERISA (other than a reportable event that is not subject to the provision for 30-day notice to the PBGC), (b) the withdrawal of the Company or any of its ERISA Affiliates from a Multiemployer Plan during the plan year, or from a Pension Plan during any plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Pension Plan or the treatment of an amendment to a Pension Plan as a termination thereof pursuant to Section 4041 of ERISA, (d) the institution of proceedings to terminate a Pension Plan by the PBGC or (e) any other event or condition which might reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan. "UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Restricted Subsidiary of the Company; PROVIDED, HOWEVER, that either (A) the Subsidiary to be so designated has total assets of $1,000 or less or (b) if such Subsidiary has assets greater than $1,000, such designation would be permitted under Section 5.4. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER, that immediately after giving effect to such designation (x) if such Unrestricted Subsidiary at such time has Indebtedness, the Company could Incur $1.00 of additional Indebtedness under Section 5.3(a) and (y) no Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced by the Company to the Administrative Agent by promptly filing with the Administrative Agent a copy of the board resolution giving effect to such -25- designation and an officers' certificate certifying that such designation complied with the foregoing provisions. "WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary all the Capital Stock of which (other than directors' qualifying shares and shares held by other Persons to the extent such shares are required by applicable Law to be held by a Person other than the Company or a Restricted Subsidiary) is owned by the Company or one or more Wholly Owned Subsidiaries. 1.2 USE OF DEFINED TERMS. Any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. 1.3 ACCOUNTING TERMS. All accounting terms not specifically defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted by this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, EXCEPT as otherwise specifically prescribed herein. In the event that GAAP change during the term of this Agreement such that any of the covenants contained in Article V would then be calculated in a different manner or with different components, (a) the Company and the Lenders agree to amend this Agreement in such respects as are necessary to conform that covenant as a criterion for evaluating the Company's financial condition to substantially the same criterion as was effective prior to such change in GAAP and (b) the Company shall be deemed to be in compliance with the covenant contained in such Section during the 60-day period following any such change in GAAP and to the extent that the Company would have been in compliance therewith under GAAP as in effect immediately prior to such change. 1.4 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this Agreement, either as originally existing or as the same may from time to time be supplemented, modified or amended, are incorporated herein by this reference. A matter disclosed on any Schedule shall be deemed disclosed on all Schedules. 1.5 MISCELLANEOUS TERMS. The term "or" is disjunctive; the term "and" is conjunctive. The term "shall" is mandatory; the term "may" is permissive. Masculine terms also apply to females; feminine terms also apply to males. The term "including" is by way of example and not limitation. -26- ARTICLE II THE LOAN 2.1 THE LOAN. (a) Subject to the terms and conditions set forth in this Agreement, on the Closing Date the Lenders shall make a term Loan to the Company in the principal amount of $15,000,000. Each Lender shall make its Pro Rata Share of the Loan in immediately available funds available to the Administrative Agent at the Administrative Agent's account number 9301035763 at The Chase Manhattan Bank, N.A. (ABA No. 021-000-021) ref: Geologistics Corporation. No portion of the Loan which is prepaid or repaid may be reborrowed. (b) From time to time, the Company may designate portions of the Loan as Base Rate Tranches or Eurodollar Tranches pursuant to a Pricing Designation which shall specify the date upon which the requested Tranche will commence, amount of such Tranche and whether the Tranche shall be a Base Rate Tranche or a Eurodollar Tranche, and if a Eurodollar Tranche, the last day of the Interest Period with respect thereto (which shall be a date one, two, three or six months after the date of such Loan). Each Pricing Designation must be sent by telecopier or telex to the Administrative Agent, signed by a Responsible Official of the Company. (c) Promptly following receipt of a Pricing Designation, the Administrative Agent shall notify each Lender by telephone, telecopier or telex thereof. (d) Unless the Majority Lenders otherwise consent, each Tranche shall be in an integral multiple of $100,000, which, in the case of a Eurodollar Tranche is in an amount not less than $500,000, and no more than five Eurodollar Tranches having different Interest Periods may be outstanding at any time. (e) Subject to Sections 3.3(c) and (g) hereof, a Pricing Designation shall be irrevocable upon receipt of such Pricing Designation by the Administrative Agent. (f) Each Pricing Designation shall be submitted to the Administrative Agent, at the Administrative Agent's Office, not later than 1:00 p.m, New York time, (a) with respect to a request for a Base Rate Tranche, on the Business Day of the requested Loan, and (b) with respect to a request for a Eurodollar Tranche, on the Business Day that is three Business Days prior to the first day of the applicable Interest Period. -27- (g) If , as of the date of any maturing Tranche, no Pricing Designation has been submitted within the requisite notice period set forth in this Section, then the Company shall be deemed to have requested a Base Rate Tranche in the amount of the maturing Tranche. -28- ARTICLE III PAYMENTS AND FEES 3.1 PRINCIPAL AND INTEREST. (a) Interest shall be payable on the outstanding daily unpaid principal amount of the Loan from the date thereof until payment in full is made and shall accrue and be payable at the rates set forth herein before and after default, before and after maturity, before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. (b) Interest accrued on each Eurodollar Tranche as of the last day of the Interest Period with respect thereto shall be due and payable on that day and, if such Interest Period is longer than three months, on the last day of each three month period, the first of which commences on the first day of such Interest Period, during such Interest Period. Interest accrued on each Base Rate Tranche as of each Quarterly Payment Date shall be due and payable on that day. Except as otherwise provided in Sections 3.3 and 3.4, (i) the unpaid principal amount of each Base Rate Tranche shall bear interest at a fluctuating rate per annum equal to the Base Rate PLUS 1.75% and (ii) the unpaid principal amount of each Eurodollar Tranche shall bear interest at a rate per annum equal to the relevant Eurodollar Rate PLUS 3.25%. Each change in the interest rate applicable to a Base Rate Tranche hereunder shall take effect simultaneously with the corresponding change in the Base Rate. Each change in the Base Rate shall be effective as of 12:01 a.m. on the Business Day on which the change in the Base Rate is announced, unless otherwise specified in such announcement, in which case the change shall be effective as so specified. (c) If not sooner paid, the principal Indebtedness evidenced by the Notes shall be payable by the Company as follows: (i) In the event that the holders of any then outstanding obligations under the Bank Credit Agreement have exercised their rights to be repaid upon the occurrence of any Change of Control Event, then all of the Obligations under this Agreement and the Loan Documents shall be repaid concurrently with the repayment of the obligations under the Bank Credit Agreement; -29- (ii) the principal amount of the Notes shall be repaid in an amount equal to the lesser of (a) the principal amount of the Notes then outstanding or (b) 100% of the Net Cash Proceeds of any offering of equity securities of the Company concurrently with the receipt of such Net Cash Proceeds, PROVIDED that the proceeds (A) from private sales of such equity securities to any Person which is a shareholder of the Company which do not exceed $5,000,000 and (B) from routine exercises of employee stock options, employee warrants and employee plans shall not be required to be applied by the Company to repay the Notes for so long as no Default or Event of Default exists; and (iii) the principal Indebtedness evidenced by the Notes shall in any event be payable on the Maturity Date. (d) VOLUNTARY PREPAYMENT. The Company each may, at any time and from time to time, voluntarily pay or prepay the Notes in whole or in part, EXCEPT that with respect to any voluntary prepayment of the Notes under this Section: (i) the Administrative Agent shall have received written notice of any prepayment before 10:00 a.m., New York time, on the Business Day on which such payment is to be made, which notice shall identify the date and amount of the prepayment; (ii) The Company shall pay any Breakage Fees due pursuant to Section 3.3(g) with respect to any Eurodollar Tranche in connection with such prepayment; and (iii) any partial prepayment shall be in an integral multiple of $1,000,000. 3.2 UPFRONT FEES. The Company shall pay to the Administrative Agent the fees described in the Administrative Agent's Letter on the dates set forth therein, which fees are for the sole account of the Administrative Agent. 3.3 INCREASED COSTS. (a) If any Lender determines that either (i) the introduction of or any change in any law or regulation or in the interpretation or administration of any Law -30- or regulation by any Governmental Agency charged with the interpretation or administration thereof from the Closing Date or (ii) compliance with any guideline or request from any such Governmental Agency (whether or not having the force of law) has or would have the effect of reducing the rate of return on the capital of the Lender or any corporation controlling the Lender as a consequence of or with reference to the Lender's making or maintaining its Pro Rata Share, or other transaction hereunder below the rate which the Lender or such other corporation could have achieved but for such introduction, change or compliance (taking into account the policies of the Lender or corporation with regard to capital), then the Company shall from time to time, upon demand by the Lender, pay to the Lender additional amounts sufficient to compensate the Lender or other corporation for such reduction. A certificate as to such amounts in reasonable detail, submitted to the Company by a Lender (with a copy to the Administrative Agent), shall be conclusive and binding for all purposes, absent manifest error. Each Lender agrees promptly to notify the Company of any circumstances that would cause the Company to pay additional amounts pursuant to this Section, PROVIDED that the failure to give notice shall not affect the Company's obligation to pay such additional amounts hereunder. (b) In the event that any Lender shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the Eurodollar Rate for any Interest Period, (A) that by reason of any changes arising after the date of this Agreement affecting the London interbank Eurodollar market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of the Eurodollar Rate; or (B) that the relevant Eurodollar Rate shall not represent the effective pricing to such Lender for funding or maintaining its portion of a Eurodollar Tranche, or (ii) such Lender shall at any time incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Eurodollar Tranche in any such case because of (A) any change since the date of this Agreement in any applicable law or governmental rule, regulation, guideline or order or any interpretation thereof and including the introduction of any new law or governmental rule, regulation, guideline or order (such as, for example, a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D of the Federal Reserve Board to the extent included in the computation of the Eurodollar Rate), whether or not having the force of law and whether or not failure to comply therewith would be unlawful, or (B) other circumstances materially and adversely affecting the London interbank eurodollar market or the position of such Lender in such market, or (iii) at any time, that the making - 31 - or continuance by it of any Eurodollar Tranche has become unlawful by compliance by such Lender in good faith with any law or governmental rule, regulation, guideline or order (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) or has become impracticable as a result of a contingency occurring after the date of this Agreement that materially and adversely affects the London interbank eurodollar market, then, and in any such event, such Lender shall, promptly after making such determination, give notice (by telephone promptly confirmed in writing) to the Company and the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter, (x) in the case of clause (i) above, the Company's right to request Eurodollar Tranches shall be suspended, and any Pricing Designation given by the Company with respect to any borrowing of Eurodollar Tranches that has not yet been made shall be deemed canceled and rescinded, (y) in the case of clause (ii) above, the Company shall pay to such Lender, upon such Lender's delivery of written demand therefor to the Company with a copy to the Administrative Agent, such additional amounts (in the form of an increased rate of interest, or a different method of calculating interest, or otherwise, as such Lender in its sole discretion shall determine) as shall be required to compensate such Lender for such increased costs or reduction in amounts received or receivable hereunder and (z) in the case of clause (iii) above, the Company shall take one of the actions specified in clause (c) below as promptly as possible and, in any event, within the time period required by law. Each request for compensation by a Lender under this clause (b) shall be submitted within 90 days following the date upon which such Lender first becomes aware of the events giving rise to the request for compensation. (c) In the case of any Eurodollar Tranche or requested Eurodollar Tranche affected by the circumstances described in clause (b)(iii) above the Company shall, either if any such Eurodollar Tranche has not yet been made but is then the subject of a Pricing Designation, or if any such Eurodollar Tranche is then outstanding, require the affected Lender to convert each such Eurodollar Tranche into a Base Rate Tranche at the end of the applicable Interest Period or such earlier time as may be required by law, in each case by giving the Administrative Agent notice (by telephone promptly confirmed in writing) thereof on the Business Day that the Company was notified by the Lender pursuant to clause (b) above; PROVIDED, however, that all Lenders whose Eurodollar Tranches are affected by the circumstances described above shall be treated in the same manner under this clause (c). - 32 - (d) Promptly after giving any notice to the Company as a result of a circumstance described in Section 3.3(b)(ii) or 3.3(b)(iii), any Lender giving such notice will use good faith efforts to designate one of its offices located at an address other than that set forth on the signature pages hereto as the office at which its portion of the Loan is maintained if such designation will (i) avoid the need for, or reduce the amount of, any payment to which such Lender would otherwise be entitled pursuant to Section 3.3 or causing the Company to take any of the actions described in Section 3.3(c) and (ii) not, in the sole discretion of such Lender, be otherwise disadvantageous to such Lender. If a Lender ("Affected Lender") shall have requested compensation from Company under Sections 3.3(a) or 3.3(b)(ii) hereof to recover additional costs incurred by such Lender which are not being incurred generally by the other Lenders, then the Company may make written demand on such Affected Lender (with a copy to the Administrative Agent) for the Affected Lender to assign, and such Affected Lender shall assign pursuant to one or more duly executed Assignment and Acceptance Agreements sixty Business Days after the date of such demand, to one or more financial institutions that comply with the provisions of Section 9.8(b) (and that are reasonably acceptable to the Administrative Agent) which the Company shall have engaged for such purpose, all of such Affected Lender's rights and obligations under this Agreement and the other Loan Documents in accordance with Section 9.8. (e) In the event that the Administrative Agent determines at any time following its giving of notice based on the conditions described in clause (b)(i) above that none of such conditions exist, the Administrative Agent shall promptly give notice thereof to the Company and the Lenders, whereupon the Company's' right to request Eurodollar Tranches from the Lenders and the Lenders' obligation to make Eurodollar Tranches shall be restored. (f) In the event that a Lender determines at any time following its giving of a notice based on the conditions described in clause (b)(iii) above that none of such conditions exist, such Lender shall promptly give notice thereof to the Company and the Administrative Agent, whereupon the Company's' right to request Eurodollar Tranches from such Lender and such Lender's obligation to make Eurodollar Tranches shall be restored. (g) The Company each shall compensate each Lender, upon such Lender's delivery of a written demand therefor to the Company, with a copy to the Administrative Agent (which demand shall, absent manifest error, be final and conclusive - 33 - and binding upon all of the parties hereto), for all reasonable losses, expenses and liabilities incurred by such Lender in connection with the liquidation or reemployment of deposits or funds required by it to make or carry its Eurodollar Tranches, that such Lender sustains (any and all of the foregoing, a "Breakage Fee"): (i) if for any reason (other than a default by such Lender or a circumstance described in Section 3.3(b)(iii) with respect to such Lender) a borrowing of Eurodollar Tranches does not occur on a date specified therefor in a Pricing Designation (whether or not rescinded, canceled or withdrawn or deemed rescinded, canceled or withdrawn), (ii) if any repayment (including, without limitation, payment after acceleration) of any of its Eurodollar Tranches occurs on a date which is not the last day of the Interest Period applicable thereto, (iii) any prepayment of any of its Eurodollar Tranches is not made on any date specified in a notice of prepayment given by the Company or is made on a date other than on the last day of the Interest Period applicable thereto, or (iv) as a consequence of any default by the Company in repaying their Eurodollar Tranches or any other amounts owing hereunder with respect to its Eurodollar Tranches when required by the terms of this Agreement. (h) The Lenders shall be entitled to fund all or any portion of the Loan in any manner each Lender may determine in its sole discretion, including, without limitation, in the Grand Cayman interbank market, the London interbank market and within the United States, but all calculations and transactions hereunder shall be made on the assumption that such Lender has funded its relevant Eurodollar Tranche through the purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of such Eurodollar Tranche with a maturity equivalent to the Interest Period applicable to such Eurodollar Tranche, and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America, PROVIDED that each Lender may fund its Eurodollar Tranches in any manner that it in its sole discretion chooses and the foregoing assumption shall only be made in order to calculate amounts payable under this Section. 3.4 COMPUTATION OF INTEREST AND FEES. Computation of interest under this Agreement and the other Loan Documents shall be made on the basis of a year of 360 days and the actual number of days elapsed. If any payment to be made by the Company or any other Party under any Loan Document shall come due on a day other than a Business Day, payment shall instead be considered due on the next succeeding Business Day and the extension of time shall be reflected in computing interest. - 34 - 3.5 MANNER AND TREATMENT OF PAYMENTS. (a) Each payment hereunder with respect to the Notes or under any other Loan Document shall be made to the Administrative Agent, at the Administrative Agent's account number 9301035763 at The Chase Manhattan Bank, N.A., (ABA #021-000-021 ref: Geologistics Corporation), for the account of each of the Lenders or the Administrative Agent, as the case may be, in immediately available funds not later than 1:00 p.m., New York time, on the day of payment (which must be a Business Day); PROVIDED, however, that the Company shall provide a minimum of one hour's prior notice of any payments to be made after 11:30 a.m., New York time. All payments received after the deadlines described above on any particular Business Day and of which the Administrative Agent did not receive at least one hour's prior notice, shall be deemed received on the next succeeding Business Day, unless the Company provide to the Administrative Agent reasonably satisfactory evidence that it had initiated on a prior Business Day a wire transfer of funds to be immediately available on the particular Business Day, in which case such payment (whenever received) shall be deemed received on the particular Business Day. The amount of all payments received by the Administrative Agent for the account of each Lender shall be paid by the Administrative Agent to the applicable Lender in immediately available funds on the same day received by the Administrative Agent (provided that payments received by the Administrative Agent after 1:00 p.m, New York time on any Business Day, and all payments received after 11:30 a.m., New York time, on any particular Business Day and of which the Administrative Agent did not receive at least one hour's prior notice, shall be deemed to be received on the next Business Day). All payments shall be made in lawful money of the United States of America. (b) Each Lender shall use its best efforts to keep a record of payments received by it with respect to its Note and, subject to Section 8.6(g), such record shall be presumptive evidence of the amounts owing. Notwithstanding the foregoing sentence, no Lender shall be liable to any party for any failure to keep such a record. (c) Each payment of any amount payable by the Company or any other Party under this Agreement or any other Loan Document shall be made free - 35 - and clear of, and without reduction by reason of, any taxes, assessments or other charges imposed by any Governmental Agency, central bank or comparable authority (other than taxes on income, gross receipts or net worth generally applicable to banks or financial institutions). To the extent that the Company is obligated by applicable Law to make any deduction or withholding on account of taxes, assessments or other charges imposed by any Governmental Agency from any amount payable to any Lender under this Agreement, the Company shall make such deduction or withholding and pay the same to the relevant Governmental Agency and pay such additional amount to that Lender as is necessary to result in that Lender's receiving a net after-tax (or after assessment or after-charge) amount equal to the amount to which that Lender would have been entitled under this Agreement absent such deduction or withholding. If and when receipt of such payment results in an excess payment or credit to that Lender on account of such taxes, assessments or other charges, that Lender shall refund such excess to the Company. (d) Each Lender that is organized outside the United States of America shall promptly, and in any event prior to the due date of any payment by the Company hereunder, deliver to the Company an Internal Revenue Service Form 4224 and any other certificate or statement or exemption required by applicable Laws, properly completed and duly executed by such Lender, to establish that such payment is not subject to withholding under the Code because such payment is effectively connected with the conduct by such Lender of a trade or business in the United States of America. Unless the Company and the Administrative Agent have received such Form or other documents satisfactory to them indicating that payments hereunder or under the Notes are not subject to United States withholding tax, the Company or the Administrative Agent shall withhold taxes from such payments at the applicable statutory rate in the case of payments to or for any Lender organized under the Laws of a jurisdiction outside the United States of America and Section 3.5(c) shall not apply thereto. 3.6 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. Any decision by the Administrative Agent or any Lender not to require payment of any interest, fee, costs or other amount payable under any Loan Document, or to calculate any amount payable by a particular method, on any occasion, shall in no way limit or be deemed a waiver of the Administrative Agent's or such Lender's right to require full payment of any interest, fee, - 36 - cost or other amount payable under any Loan Document, or to calculate an amount payable by another method, on any other or subsequent occasion. 3.7 ADMINISTRATIVE AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE BY THE COMPANY. Unless the Administrative Agent shall have been notified by the Company prior to the date on which any payment to be made hereunder that such the Company does not intend to remit such payment, the Administrative Agent may, in its discretion, assume that the Company has remitted such payment when so due and the Administrative Agent may, in its discretion and in reliance upon such assumption, make available to each Lender on such payment date an amount equal to such Lender's share of such assumed payment. If the Company has not in fact remitted such payment to the Administrative Agent, each Lender shall forthwith on demand repay to the Administrative Agent the amount of such assumed payment made available to such Lender, together with interest thereon with respect to each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent at a rate per annum equal to the Federal Funds Rate for such period. 3.8 FEE AND COST DETERMINATION DETAIL. The Administrative Agent and each Lender shall provide reasonable detail to the Company regarding the manner in which the amount of any payment to the Administrative Agent or that Lender under this Agreement has been determined. 3.9 SURVIVABILITY. All of the Company's obligations under Section 3.3 shall survive for three months following the date on which the Loan is fully paid; PROVIDED, however, that such obligations shall not, from and after the date on which the Loan is fully paid, be deemed Obligations for any purpose under the Loan Documents. - 37 - ARTICLE IV REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Lenders that, in each case after giving effect to the transactions contemplated hereby: 4.1 SOLVENCY. On the Closing Date and after giving effect to the transactions contemplated hereby, the Company and each Restricted Subsidiary shall be Solvent. 4.2 EXISTENCE AND QUALIFICATION, POWER, COMPLIANCE WITH LAWS. The Company is a corporation duly formed, validly existing and in good standing under the Laws of Delaware. The Company is duly qualified to transact business, and is in good standing in Delaware and each other jurisdiction in which the conduct of its business or the ownership or leasing of its Properties makes such qualification or registration necessary, EXCEPT where the failure so to qualify or register and to be in good standing would not constitute a Material Adverse Effect. The Company has all requisite corporate power and authority to conduct its business, to own and lease its Properties and to execute and deliver each Loan Document to which it is a Party and to perform the Obligations to be performed by it thereunder. The Company and its Guarantor Subsidiaries have each duly executed and delivered each Loan Document to which each is a party. All outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid, non-assessable and issued in compliance with all applicable state, provincial and federal securities and other Laws. As of the Closing Date, there are 5,000,000 shares of common stock of the Company authorized and (as of July 10, 1998) 2,128,893 shares of common stock of the Company issued and outstanding and not less than eighty percent (80%) of the issued and outstanding shares of the capital stock of the Company are then owned collectively by the Sponsors and the management of the Company and its Subsidiaries. No Person holds any option, warrant or other right to acquire any shares of capital stock of the Company except as disclosed in the Bank Credit Agreement Schedules. The Company is in compliance with all Laws and other legal requirements applicable to its business, has obtained all authorizations, consents, approvals, orders, licenses and permits from, and has accomplished all Filings, registrations and qualifications with, or obtained exemptions from any of the foregoing from, any Governmental Agency that are necessary for the transaction of its business, EXCEPT where - 38 - the failure so to comply, file, register, qualify or obtain exemptions does not constitute a Material Adverse Effect. 4.3 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS AND GOVERNMENT REGULATIONS. The execution, delivery and performance by each of the Company and its Restricted Subsidiaries of the Loan Documents to which it is a Party have been duly authorized by all necessary corporate action, and do not: (a) Require any consent or approval not heretofore obtained of any partner, director, stockholder, security holder or creditor of such Party; (b) Violate or conflict with any provision of such Party's charter, consenting documents, articles of incorporation or bylaws, as applicable; (c) Result in or require the creation or imposition of any Lien or Right of Others upon or with respect to any Property now owned or leased or hereafter acquired by such Party; (d) Violate any Requirement of Law applicable to such Party; (e) Constitute a "transfer of an interest" or an "obligation incurred" that is avoidable by a trustee under Section 548 of the Bankruptcy Code of 1978, as amended, or constitute a "fraudulent conveyance," "fraudulent obligation" or "fraudulent transfer" within the meanings of the Uniform Fraudulent Conveyance Act or Uniform Fraudulent Transfer Act or any similar law, as enacted in any jurisdiction; or (f) Result in a breach of or default under or would, with the giving of notice or the lapse of time or both, constitute a breach of or default under, or cause or permit the acceleration of any obligation owed under, any indenture or loan or credit agreement or any other Contractual Obligation to which such Party is a party or by which such Party or any of its Property is bound or affected; and neither the Company nor any of its Subsidiaries is in violation of, or default under, any Requirement of Law or Contractual Obligation, or any indenture, loan or credit agreement, in any respect that constitutes a Material Adverse Effect. - 39 - 4.4 NO GOVERNMENTAL APPROVALS REQUIRED. No authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, any Governmental Agency is required to authorize or permit under applicable Laws the execution, delivery and performance by the Company and each of its Guarantor Subsidiaries of the Loan Documents to which it is a Party. 4.5 SUBSIDIARIES. (a) Schedule 4.5 hereto correctly sets forth as of the Closing Date the names, the form of legal entity, jurisdictions of organization and the number of shares of capital stock issued and outstanding of each Guarantor Subsidiary of the Company formed since December 1, 1997. As of the Closing Date, the Company does not own any capital stock or equity interest in any Person other than its Subsidiaries. Unless otherwise indicated on Schedule 4.5 or described in the Bank Credit Agreement Schedules, as of the Closing Date, all of the outstanding shares of capital stock or all of the units of equity interest, as the case may be, of each Guarantor Subsidiary are owned of record and beneficially by the Person designated on Schedule 4.5 (or so described), there are no outstanding options, warrants or other rights to purchase capital stock of any Guarantor Subsidiary, and all such shares or equity interests so owned are duly authorized, validly issued, fully paid, nonassessable, and were issued in compliance with all applicable Laws, and are free and clear of all Liens and Rights of Others, EXCEPT for Permitted Liens and Permitted Rights of Others. (b) Each Guarantor Subsidiary is a legal entity, duly organized, validly existing, and in good standing under the Laws of its jurisdiction of organization, is duly qualified to do business as a foreign organization and is in good standing as such in each jurisdiction in which the conduct of its business or the ownership or leasing of its properties makes such qualification necessary (EXCEPT where the failure to be so duly qualified and in good standing does not constitute a Material Adverse Effect), and has all requisite power and authority to conduct its business and to own and lease its Properties. (c) Each Guarantor Subsidiary is in compliance with all Laws and other requirements applicable to its business and has obtained all authorizations, consents, approvals, orders, licenses, and permits from, and each such Subsidiary has accomplished all filings, registrations, and qualifications with, - 40 - or obtained exemptions from any of the foregoing from, any Governmental Agency that are necessary for the transaction of its business EXCEPT where the failure to be in such compliance, obtain such authorizations, consents, approvals, orders, licenses, and permits, accomplish such filings, registrations, and qualifications, or obtain such exemptions, does not constitute a Material Adverse Effect. 4.6 FINANCIAL STATEMENTS. The Company has furnished to the Lenders (a) the audited financial statements of the Company and its Subsidiaries as at December 31, 1997, (b) and the unaudited consolidated and consolidating financial statements of the Company and its Subsidiaries as of March 31, 1998. The financial statements described above fairly present the financial condition and the results of operations of the Persons described as at such dates and for such periods in accordance with GAAP consistently applied, subject to year-end adjustments and the absence of footnotes. 4.7 NO OTHER LIABILITIES; NO MATERIAL ADVERSE EFFECT. Except as disclosed on Schedule 4.7, as of the Closing Date, the Company and its Restricted Subsidiaries do not and will not have any material liability or material contingent liability not reflected or disclosed in the financial statements described in Section 4.6. Except as otherwise disclosed in writing to the Lenders prior to the Closing Date, there has been no event or circumstance that has occurred that constitutes a Material Adverse Effect since December 31, 1997 or at the Closing Date. 4.8 TITLE TO PROPERTY. As of March 31, 1998, the Company and its Subsidiaries have, good and valid title to all the Property reflected in the financial statements described in Section 4.6 other than Property subsequently sold or disposed of in the ordinary course of business, free and clear of all Liens and Rights of Others, other than Permitted Liens and Permitted Rights of Others and as otherwise permitted by Section 5.10. 4.9 INTANGIBLE ASSETS. Except as set forth in the Bank Credit Agreement Schedules and on Schedule 4.9, the Company and its Restricted Subsidiaries own, or possess the right to use to the extent necessary in their respective businesses, all trademarks, trade names, copyrights, patents, patent rights, computer software, licenses and other Intangible Assets that are used in the conduct of their respective businesses as now operated and which are material to the condition (financial or otherwise), business or operations of the Company and its Restricted Subsidiaries, taken as a whole, and no such -41- Intangible Asset, to the Best Knowledge of the Company, conflicts with the valid trademark, trade name, copyright, patent, patent right or Intangible Asset of any other Person to the extent that such conflict constitutes a Material Adverse Effect. 4.10 GOVERNMENTAL REGULATION. Neither the Company nor any of its Guarantor Subsidiaries is subject to regulation under any Law limiting or regulating its ability to incur Indebtedness for money borrowed. 4.11 LITIGATION. As of the Closing Date, there are no actions, suits, proceedings or investigations pending as to which the Company or its Guarantor Subsidiaries have been served or have received notice or, to the Best Knowledge of the Company, have been threatened against or affecting the Company or its Guarantor Subsidiaries or any Property of any of them before any Governmental Agency that individually could be reasonably expected to (i) result in an adverse decision which could, in a manner not involving the payment of money, materially and adversely affect the condition (financial or otherwise) or business operations of the Company and its Guarantor Subsidiaries, taken as a whole, or the properties and assets of the Company and its Subsidiaries, taken as a whole, or (ii) in any manner draw into question the validity or enforceability of any Loan Document. As of the Closing Date, except as set forth in the Bank Credit Agreement Schedules and on Schedule 4.11, there are no actions, suits, proceedings or investigations pending as the Company and its Guarantor Subsidiaries, or, to the Best Knowledge of the Company and its Guarantor Subsidiaries, threatened against or affecting the Company or its Guarantor Subsidiaries which could reasonably be expected to result in a judgment in excess of $500,000 (other than a money judgment covered by insurance as to which the insurance the Company has not disclaimed or reserved the right to disclaim coverage) being entered or filed against the Company or any of its Guarantor Subsidiaries. 4.12 BINDING OBLIGATIONS. Each of the Loan Documents to which the Company or any of its Guarantor Subsidiaries is a Party will, when executed and delivered by such Party, constitute the legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, EXCEPT as enforcement may be limited by Debtor Relief Laws or equitable principles relating to the granting of specific performance and other equitable remedies as a matter of judicial discretion. -42- 4.13 NO DEFAULT. As of the Closing Date, and giving effect to each of the transactions contemplated to occur thereon, no event has occurred and is continuing that is a Default or an Event of Default. 4.14 ERISA. (a) EXCEPT as disclosed in the Bank Credit Agreement Schedules, neither the Company nor any ERISA Affiliate maintains, contributes to or is required to or will maintain, contribute to or will be required to contribute to, any "employee pension benefit plan" that is subject to Title IV of ERISA. (b) With respect to each Pension Plan and except as may be otherwise therein described: (i) such Pension Plan complies in all material respects with ERISA and any other applicable Laws; (ii) such Pension Plan has not incurred any material "accumulated funding deficiency," as that term is defined in Section 302 of ERISA; (iii) no "reportable event" (as defined in Section 4043 of ERISA) has occurred that would subject the Company or any of its ERISA Affiliates to any liability with respect to such Pension Plan that would constitute a Material Adverse Effect; (iv) neither the Company nor any ERISA Affiliate thereof has engaged in any nonexempt "prohibited transaction" (as defined in Section 4975 of the Code) that would subject the Company or any of its ERISA Affiliates to any penalty that would constitute a Material Adverse Effect; (v) no Termination Event has occurred or may reasonably be expected to occur that would constitute a Material Adverse Effect; (vi) no material liability to the PBGC (other than required premium payments), the Internal Revenue Service, any Pension Plan, -43- Multiemployer Plan or any trust related thereto has been, or is expected by the Company or any of its ERISA Affiliates to be, incurred by the Company or any of its ERISA Affiliates that would constitute a Material Adverse Effect; (vii) neither the Company nor any of its ERISA Affiliates has any contingent liability with respect to any post-retirement benefit under any "Welfare plan" (as defined in Section 3(1) of ERISA) that would constitute a Material Adverse Effect, other than liability for continuation coverage under Part 6 of Title I of ERISA; and (viii) no lien under Section 412(n) of the Code or 302(f) of ERISA or requirement to provide security under Section 401(a)(29) of the Code or Section 307 of ERISA has been or is reasonably expected by the Company or any of its ERISA Affiliates to be imposed on the assets of the Company or any member of its ERISA Affiliates that would constitute a Material Adverse Effect. (c) As of the Closing Date, all contributions required to be made by the Company or any of its ERISA Affiliates to a Multiemployer Plan have been made. 4.15 REGULATIONS T, U AND X. No part of the proceeds of the Loan will be used to purchase or carry, or to extend credit to others for the purpose of purchasing or carrying, any "margin stock" (as such term is defined in Regulations T, U and X) in violation of Regulations T, U or X. Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any such "margin stock." 4.16 DISCLOSURE. No written statement made by a Senior Officer of the Company or any of its Subsidiaries to any Creditor in connection with this Agreement, or in connection with the Loan, as such statement may be amended, modified or supplemented prior to the Closing Date, contains any untrue statement of a material fact or omits a material fact necessary in order to make the statement made not misleading in light of all the circumstances existing at the date the statement was made. To the Best Knowledge of the Company there is no fact (other than matters of a general economic nature or matter generally applicable to businesses of the types engaged in by the -44- Company and its Subsidiaries) that would constitute a Material Adverse effect that has not been disclosed in writing to the Administrative Agent and the Lenders. 4.17 TAX LIABILITY. Except as disclosed in the Bank Credit Agreement Schedules, the Company and its Guarantor Subsidiaries have filed all material tax returns that are required to be filed, and have paid, or made provision for the payment of, all taxes with respect to the periods, Property or transactions covered by said returns, or pursuant to any assessment received by the Company or any of its Guarantor Subsidiaries, EXCEPT: (a) taxes for which the Company or its relevant Guarantor Subsidiaries have been fully indemnified; (b) such taxes, if any, as are being contested in good faith by appropriate proceedings and as to which adequate accounting reserves have been established and maintained; and (c) such minor taxes involving not more than $25,000 in potential liability in any particular instance (or more than $100,000 in the aggregate) imposed by a political subdivision of a State of the United States of America or the United Kingdom. To the Best Knowledge of the Company, there is no tax assessment contemplated or proposed by any Governmental Agency against the Company or any of its Guarantor Subsidiaries that would constitute a Material Adverse Effect OTHER than as of each date subsequent to the Closing Date, such contemplated or proposed tax assessments with respect to which the Company (i) has promptly notified Administrative Agent in writing of its knowledge and (ii) the Company or the appropriate Guarantor Subsidiary of the Company has in good faith commenced, and thereafter diligently pursued, appropriate proceedings in opposition to such assessments. 4.18 PROJECTIONS. As of the Closing Date, to the Best Knowledge of the Company, the assumptions set forth in the Projections attached hereto as Schedule 4.18 are reasonable and consistent with each other and with all facts known to any Senior Officer of the Company, and in the reasonable judgment of the Company, no material assumption is omitted as a basis for the Projections, and the Projections are reasonably -45- based on such assumptions. Nothing in this Section shall be construed as a representation or covenant that the Projections in fact will be achieved. 4.19 EMPLOYEE MATTERS. Except as disclosed on the Bank Credit Agreement Schedules and on Schedule 4.19, there is no strike or work stoppage in existence or threatened involving the Company or its Guarantor Subsidiaries, and no such strike or work stoppage may reasonably be expected to result in or constitute a Material Adverse Effect. 4.20 HAZARDOUS MATERIALS. Except as specifically described in the Bank Credit Agreement Schedules and on Schedule 4.20, neither the Company nor any of its Guarantor Subsidiaries, nor any predecessor in title or any third person at any time occupying or present on the real property owned or leased at any time by the Company or any of its Guarantor Subsidiaries, has disposed of, discharged, released or threatened the release of any material amount of Hazardous Materials on, from or under such real property in any manner that violates any Hazardous Materials Laws which violation could reasonably be expected to have a Material Adverse Effect. Except as specifically described in the Bank Credit Agreement Schedules and on Schedule 4.20, there have been no actions, events, conditions or circumstances that might cause the Company or any Guarantor Subsidiary to incur response costs under environmental Law, or costs relating to personal or property injury relating to owned or leased real property, except as would not individually or in the aggregate have a Material Adverse Effect. Except as specifically described in the Bank Credit Agreement Schedules and on Schedule 4.20, no real property owned or leased by the Company or any of its Guarantor Subsidiaries or portion thereof is or has been utilized by the Company or any of its Guarantor Subsidiaries as a site for the manufacture, handling, treatment, storage or disposal of any Hazardous Materials and all such real property is in compliance in all material respects with all Hazardous Materials Laws. To the extent that any Hazardous Materials have been, or are used, generated or stored by the Company or any of its Guarantor Subsidiaries on any real property, or transported to or from such real property by the Company or its Guarantor Subsidiaries, such use, generation, storage and transportation have been, and are, in compliance in all material respects with all Hazardous Materials Laws. For the purposes of this Section, the phrase "real property owned or leased" includes, without limitation, any real property which is in the charge, management or control of the Company or any of its Guarantor Subsidiaries or otherwise for which the Company or any of its Guarantor Subsidiaries may be liable or responsible under any Hazardous Materials Laws. -46- 4.21 LABOR DISPUTES. Except as set forth in the Bank Credit Agreement Schedules and on Schedule 4.21, there is no collective bargaining agreement or other labor contract covering any employees of the Company or its Guarantor Subsidiaries except for that covering employees of any Canadian Subsidiaries of the Company. -47- ARTICLE V COVENANTS 5.1 PAYMENT OF NOTES. The Company shall promptly pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Agreement. 5.2 SEC REPORTS. The Company shall file with the Commission and provide to the Administrative Agent and Lenders, within 15 days after it files them with the Commission, copies of the annual reports and the information, documents and other reports which it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the Commission (unless the Commission will not accept such a filing) and provide the Administrative Agent and Lenders with the annual reports and the information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such Sections, such information, documents and other reports to be so filed and provided at the times specified for the filing of such information, documents and reports under such Sections. Delivery of such reports, information and documents to the Administrative Agent is for informational purposes only and the Administrative Agent's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Administrative Agent is entitled to rely exclusively on Certificates of Responsible Officials). 5.3 LIMITATION ON INDEBTEDNESS. (a) (i) The Company shall not Incur, directly or indirectly, any Indebtedness unless, on the date of such Incurrence, the Consolidated Coverage Ratio exceeds 2.25 to 1.0 and (ii) none of the Restricted Subsidiaries of the Company shall Incur, directly or indirectly, any Indebtedness unless, on the date of such Incurrence, the Consolidated Coverage Ratio exceed 2.50 to 1.0. (b) Notwithstanding Section 5.3(a), the Company and the Restricted Subsidiaries may Incur any or all of the following Indebtedness: -48- (i) Indebtedness (including reimbursement obligations in respect of letters of credit outstanding under the Bank Credit Agreement that are Indebtedness) Incurred pursuant to any Bank Credit Agreement or any other credit or loan agreement in an aggregate principal amount which, when taken together (without duplication) with the principal amount of all other Indebtedness Incurred pursuant to this clause (i) and then outstanding, does not exceed $100,000,000; (ii) Indebtedness of the Company or any Restricted Subsidiary owed to and held by the Company or any Restricted Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to another Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the Company or such Restricted Subsidiary; (iii) the Notes, the Guaranties or any Indebtedness the proceeds of which are used to refinance the Notes in full; (iv) Indebtedness (including reimbursement obligations in respect of letters of credit or guarantees outstanding under Foreign Credit Agreements that are Indebtedness) Incurred pursuant to any Foreign Credit Agreement; PROVIDED, that the aggregate principal amount of all such Indebtedness outstanding at any time under all such Foreign Credit Agreements shall not exceed $30,000,000; (v) Indebtedness outstanding on the Senior Note Issue Date (other than Indebtedness described in clause (i), (ii), (iii) or (iv) of this Section 5.3(b)); (vi) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) of this Section 5.3 or pursuant to clause (iii) or (v) of this Section 5.3(b) or this Section 5.3(b)(vi); (vii) Indebtedness in respect of customs duties guarantees, equipment leases, performance bonds, bankers, acceptances, letters of credit and surety or appeal bonds entered into by the Company or any Restricted Subsidiary in the ordinary course of business; -49- (viii) Hedging Obligations consisting of Interest Rate Agreements directly related to Indebtedness permitted to be Incurred by the Company or any Restricted Subsidiary hereunder; (ix) Indebtedness of the Company or any Restricted Subsidiary consisting of obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets by the Company or any Restricted Subsidiary permitted hereunder; (x) Indebtedness incurred by the Company or any Restricted Subsidiary, constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including, without limitation, letters of credit in respect of workers, compensation claims, self-insurance or similar matters, or other Indebtedness with respect to reimbursement obligations regarding workers, compensation claims; provided, however, that upon the drawing of such letters of credit or the Incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or Incurrence; and (xi) Indebtedness in an aggregate principal amount which, together with all other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness permitted by clauses (i) through (x) above or Section 5.3(a)), does not exceed, when aggregated with the principal amount of the Notes then outstanding, $15,000,000. (c) Notwithstanding the foregoing, neither the Company nor any Restricted Subsidiary shall Incur any Indebtedness pursuant to the foregoing Section 5.3(b) if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations unless such Indebtedness shall be subordinated to the Notes or the Guaranties, as applicable, to at least the same extent as such Subordinated Obligations. (d) For purposes of determining compliance with this Section 5.3, (i) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, will classify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of the above clauses and (ii) an item of Indebtedness may be divided and classified in more than one of the types of Indebtedness described above. -50- 5.4 LIMITATIONS ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes, and after giving effect to, the proposed Restricted Payment: (i) a Default shall have occurred and be continuing (or would result therefrom); (ii) the Company or such Restricted Subsidiary, as applicable, is not able to Incur an additional $1.00 of Indebtedness under Section 5.3(a); or (iii) the aggregate amount of such Restricted Payment and all other Restricted Payments since the Senior Note Issue Date would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period ) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Notes are originally issued to the end of the most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B) the aggregate Net Cash Proceeds received by the Company from capital contributions or the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Senior Note Issue Date (other than an issuance or sale to a Subsidiary of the Company); (C) the amount by which Indebtedness of the Company is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Senior Note Issue Date, of any Indebtedness of the Company or a Restricted Subsidiary for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair market value of any other property, distributed by the Company upon such conversion or exchange), whether pursuant to the terms of such Indebtedness or pursuant to an agreement with a creditor to engage in an equity for debt exchange; and (D) an amount equal to the sum of (i) the net reduction in Investments in Unrestricted Subsidiaries resulting from the receipt of dividends, repayments of loans or advances or other transfers of assets or proceeds from the disposition of Capital Stock or other distributions or payments, in each case to the Company or any Restricted Subsidiary from, or with respect to interests in Unrestricted Subsidiaries, and (ii) the portion (proportionate to the Company's equity interest in -51- such Subsidiary) of the fair market value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; PROVIDED, HOWEVER, that the foregoing sum shall not exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary subsequent to the Senior Note Issue Date. (b) The provisions of Section 5.4(a) shall not prohibit: (i) any purchase or redemption of Capital Stock or Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than (A) Disqualified Stock or (B) Capital Stock issued or sold to a Subsidiary of the Company) or out of the proceeds of a substantially concurrent capital contribution to the Company; PROVIDED, HOWEVER, that (x) such purchase, capital contribution or redemption shall be excluded in the calculation of the amount of Restricted Payments and (y) the Net Cash Proceeds from such sale of Capital Stock or capital contribution shall be excluded from Section 5.4(a)(iii)(B); (ii) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations made by exchange for, or out of the net proceeds of the substantially concurrent sale of, Indebtedness of the Company which is permitted to be Incurred pursuant to Section 5.3; PROVIDED, HOWEVER, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments; (iii) dividends paid within 60 days after the late of declaration thereof if at such date of declaration such dividend would have complied with Section 5.4(a); PROVIDED, HOWEVER, that such dividend will be included in the calculation of the amount of Restricted Payments; (iv) the repurchase of Capital Stock of the Company from directors, officers or employees of the Company pursuant to the terms of an employee benefit plan or employment or other agreement; provided that the aggregate amount of all such repurchases shall not exceed $3,000,000 in any fiscal year, and $10,000,000 in total; -52- (v) up to an aggregate of $10,000,000 of Restricted Payments by the Company, so long as after giving effect to any such Restricted Payment on pro forma basis the Company could incur an additional $1.00 of Indebtedness under Section 5.3(a)(i); and (vi) Investments in Unrestricted Subsidiaries or joint ventures in an amount not to exceed $10,000,000 at any time outstanding. 5.5 LIMITATION ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary (a) to pay dividends or make any other, distributions on its Capital Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company, (b) to make any loans or advances to the Company or (c) to transfer any of its property or assets to the Company, except: (i) any encumbrance or restriction pursuant to any Bank Credit Agreement, any Foreign Credit Agreement or any other agreement in effect at or entered into on the Senior Note Issue Date; (ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and outstanding on such date; (iii) any encumbrance or restriction pursuant to an agreement effecting a Refinancing Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of this Section 5.5 or this clause (iii) or contained in any amendment to an agreement referred to in clause (i) or (ii) of this Section 5.5 or this clause (iii); provided, however, that the encumbrances and restrictions with respect to any such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable to the Lenders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such agreements; -53- (iv) any such encumbrance or restriction (A) consisting of customary non-assignment provisions in leases to the extent such provisions restrict the subletting, assignment or transfer of the lease or the property leased thereunder or in purchase money financing or (B) by virtue of any Indebtedness, transfer, option or right with respect to, or any Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by this Agreement; (v) in the case of Section 5.5(iii), restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements or mortgages; (vi) encumbrances or restrictions imposed by operation of any applicable law, rule, regulation or order; (vii) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition; and (viii) any restriction imposed during an event of default under an agreement governing Indebtedness of any Foreign Subsidiary so long as such Indebtedness is permitted by Section 5.3. 5.6 LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Disposition unless (i) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including the value of all non-cash consideration), as determined in good faith by the Board of Directors of the Company, of the shares and assets subject to such Asset Disposition, and at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents and (ii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) (A) first, to either (i) prepay, repay, redeem or purchase (and permanently reduce the commitments under) Indebtedness under any Bank Credit Agreement or any Foreign Credit Agreement or that is otherwise secured by its assets subject to such Asset Disposition within one year -54- from the later of the date of such Asset Disposition or the receipt of such Net Available Cash (the "Receipt Date") or (ii) to the extent the Company elects, to acquire Additional Assets, PROVIDED, HOWEVER, that the Company shall be required to commit such Net Available Cash to the acquisition of Additional Assets within one year from the later of the date of such Asset Disposition or the Receipt Date and shall be required to consummate the acquisition of such Additional Assets within 18 months from the Receipt Date; (B) second, to the extent of the balance of such Net Available Cash after application in accordance with clause (A), to make an offer pursuant to paragraph (b) below to the Lenders to repay Notes at the times and in the amounts described in clause (b) of this Section; and (C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B) to any other application or use not prohibited by this Agreement. Notwithstanding the foregoing provisions of this paragraph, the Company and the Restricted Subsidiaries shall not be required to apply the Net Available Cash in accordance with this paragraph except to the extent that the aggregate Net Available Cash from all Asset Dispositions which is not applied in accordance with this paragraph exceeds $5,000,000 (at which time, the entire unutilized Net Available Cash, and not just the amount in excess of $5,000,000, shall be applied pursuant to this paragraph). Pending application of Net Available Cash pursuant to this Section 5.6, such Net Available Cash shall be invested in Permitted Investments. For the purposes of this Section 5.6, the following are deemed to be cash or cash equivalents: (x) the express, assumption of Indebtedness of the Company or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition, and (y) Notes received by the Company or any Restricted Subsidiary from the transferee that are converted by the Company or such Restricted Subsidiary into cash within 90 days of closing the transaction. (b) Unless each affected Lender otherwise consents, in the event of an Asset Disposition that requires the repayment of Notes pursuant to Section 5.6(a)(ii)(B), the Company will be required to repay the principal amount of the Notes in an amount which is proportionately equal to any prepayment or repurchase of the Senior Notes in accordance with section 4.6 of the Indenture, concurrently with the making of the offer contemplated by that Section, and shall make its repayment of the Notes concurrently with the making of any required repurchase or repayment of the Senior Notes. -55- 5.7 LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company other than the Company or a Restricted Subsidiary (an "Affiliate Transaction") unless the terms thereof (1) are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of such transaction in a comparable transaction in arm's-length dealings with a Person who is not such an Affiliate, (2) if such Affiliate Transaction involves an amount in excess of $2,000,000, (i) are set forth in writing and (ii) have been approved by a majority of the members of the Board of Directors of the Company having no material personal financial stake in such Affiliate Transaction, and (3) if such Affiliate Transaction involves an amount in excess of $7,500,000, have been determined by a nationally recognized investment banking firm to be fair, from a financial standpoint, to the Company or its Restricted Subsidiary, as the case may be. (b) The foregoing provisions of Section 5.7(a) shall not prohibit (i) any Permitted Investment or Restricted Payment permitted to be made pursuant to Section 5.4, or any payment or transaction specifically excepted from the definition of Restricted Payment, (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, collective bargaining arrangements, employee benefit plans, health and life insurance plans, deferred compensation plans, directors, and officers, indemnification agreements, retirement or savings plans, stock options and stock ownership plans or any other similar arrangement heretofore or hereafter entered into in the ordinary course of business and approved by the Board of Directors of the Company or any Restricted Subsidiary, (iii) the grant of stock options or similar rights to employees and directors pursuant to plans approved by the Board of Directors of the Company or the board of directors of the relevant Restricted Subsidiary (iv) loans or advances to officers, directors or employees heretofore or hereafter entered into in the ordinary course of business or pursuant to compensation plans or employment agreements approved by the board of directors of the Company or any Restricted Subsidiary, (v) the payment of reasonable fees to directors of the Company and its Restricted Subsidiaries who are not employees of the Company or its Subsidiaries who are not employees of the Company or its Restricted Subsidiaries, (vi) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries, (vii) the purchase of or the payment of Indebtedness of or monies owed by the Company or any of its Restricted Subsidiaries for goods or materials purchased, or services received, in the ordinary course of business, (viii) management agreements -56- between the Company or any of its Restricted Subsidiaries and one or more Permitted Holders, or any of their respective Affiliates providing for management fees not to exceed $350,000 per year to William E. Simon & Sons, LLC ("WESS") or any of its Affiliates and $350,000 per year to Oaktree Capital Management, LLC, TCW Special Credits Fund - V - Principal Fund or any of their Affiliates; and (ix) the performance of the agreement between WESS, W.E. Myers & Co. and William E. Myers, Jr. as in effect on the Senior Note Issue Date. 5.8 COMPLIANCE CERTIFICATES. The Company shall deliver to the Administrative Agent within 120 days after the end of each fiscal year of the Company an Certificate executed by a Senior Officer of the Company, stating that in the course of the performance by the signers of their duties as officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during the previous year. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the Trust Indenture Act. 5.9 FURTHER INSTRUMENTS AND ACTS. Upon request of the Administrative Agent, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Agreement. 5.10 LIMITATION ON LIENS. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist any Lien on any of its property or assets, now owned or hereafter acquired, securing any obligation unless concurrently with the creation of such Lien effective provision is made to secure the Notes and the Guaranties equally and ratably with such obligation for so long as such obligation is so secured; PROVIDED, that, if such obligation is a Subordinated Obligation, the Lien securing such obligation shall be subordinated and junior to the Lien securing the Notes and the Guaranties with the same or lesser relative priority as such Subordinated Obligation shall have been with respect to the Notes and the Guaranties. The preceding restriction shall not require the Company or any Restricted Subsidiary to secure the Notes or the Guaranties if the Lien consists of the following: -57- (a) Liens on accounts receivable of the Company and its Restricted Subsidiaries to secure Indebtedness permitted to be incurred pursuant to paragraph (a) or clause (vii) or (x) of paragraph (b) of Section 5.3; (b) Liens created by the Agreement, Liens under any Bank Credit Agreement, Liens under any Foreign Credit Agreement and Liens existing as of the Senior Note Issue Date; (c) Permitted Liens; (d) Liens to secure Indebtedness issued by the Company or a Restricted Subsidiary for the purpose of financing all or a part of the purchase price of assets or property acquired or constructed in the ordinary course of business after the Senior Note Issue Date; PROVIDED, however, that (a) the aggregate principal amount (or accredited value in the case of Indebtedness issued at a discount) of Indebtedness so issued shall not exceed the lesser of the cost or fair market value, as determined in good faith by the Board of Directors of the Company, of the assets or property so acquired or constructed, (b) the Indebtedness secured by such Liens shall have been permitted to be Incurred under Section 5.3 and (c) such Liens shall not encumber any other assets or property of the Company or any of its Restricted Subsidiaries other than such assets or property or any improvement on such assets or property and shall attach to such assets or property within 90 days of the construction or acquisition of such assets or property; (e) Liens on the assets or property of a Restricted Subsidiary existing at the time such Restricted Subsidiary becomes a Restricted Subsidiary and not issued as a result of (or in connection with or in anticipation of) such Restricted Subsidiary becoming a Restricted Subsidiary; PROVIDED, however, that such Liens do not extend to or cover any other property or assets of the Company or any of its other Restricted Subsidiaries; (f) Liens securing Capital Lease Obligations incurred in accordance with Section 5.3; (g) Liens with respect to Sale/Leaseback Transactions or other Indebtedness permitted by Section 5.3(b)(xi); -58- (h) Liens securing Indebtedness issued to refinance Indebtedness which has been secured by a Lien permitted under this Agreement and is permitted to be refinanced under this Agreement; PROVIDED, HOWEVER, that such Liens do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so refinanced; or (i) Liens on assets of the Company or any of its Restricted Subsidiaries, securing Indebtedness in an aggregate principal amount not to exceed $10,000,000. 5.11 LIMITATION ON SALE\LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless (i) the Company or such Restricted Subsidiary would be (A) in compliance with Section 5.3 immediately after giving effect to such Sale/Leaseback Transaction and (B) entitled to create a Lien on such property securing the Attributable Debt with respect to such Sale/Leaseback Transaction without securing the Notes pursuant to Section 5.10, (ii) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair market value (as determined by the Board of Directors of the Company) of such property and (iii) the Company or such Restricted Subsidiary applies the proceeds of such transaction in compliance with Section 5.6. 5.12 LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES. The Company shall not sell or otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary, and shall not permit any Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any shares of its Capital Stock to any Person (other than to the Company or a Wholly Owned Subsidiary) or permit any Person (other than the Company or a Wholly Owned Subsidiary) to own any Capital Stock of a Restricted Subsidiary, if in either case as a result thereof such Restricted Subsidiary would no longer be a Restricted Subsidiary; PROVIDED, HOWEVER, that this provision shall not prohibit (x) the Company or any Restricted Subsidiary from selling, leasing or otherwise disposing of all of the Capital Stock of any Restricted Subsidiary or (y) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this Agreement. The foregoing shall not apply to any Lien granted on the Capital Stock of a Restricted Subsidiary. -59- 5.13 PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall, and shall cause each of its Restricted Subsidiaries to, pay or discharge or cause, to be paid or discharged, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon its or its Restricted Subsidiaries, income, profits or property; PROVIDED, HOWEVER, that neither the Company nor any of its Subsidiaries shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate negotiations or proceedings and for which disputed amounts adequate reserves have been made in accordance with GAAP. 5.14 CORPORATE EXISTENCE. Subject to Section 5.16 and Section 5.6, the Company shall do or cause to be done, at its own cost and expense, all things necessary to, and will cause each of its Restricted Subsidiaries to, preserve and keep in full force and effect the corporate or partnership existence and rights (charter and statutory), licenses and/or franchises of the Company and each of its Restricted Subsidiaries; PROVIDED, HOWEVER, that the Company or any of its Restricted Subsidiaries shall not be required to preserve any such rights, licenses or franchises if the Board of Directors of the Company shall reasonably determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and the Restricted Subsidiaries, taken as a whole. 5.15 FUTURE GUARANTORS. The Company shall (a) cause each Person which hereafter becomes a Guarantor Subsidiary to execute and deliver to the Administrative Agent a Guaranty reasonably satisfactory to the Administrative Agent pursuant to which such Restricted Subsidiary will Guarantee payment of the Notes on the terms set forth in this Agreement, (b) cause LEP Canada to enter into the Guaranty as soon as is reasonably practicable and in any event within 90 days following the date hereof, and (c) deliver to the Administrative Agent an Opinion of Counsel stating that such Guaranty has been duly authorized, executed and delivered by such Restricted Subsidiary and constitutes a legal, valid, binding and enforceable obligation of such Restricted Subsidiary. Each Guaranty will be limited in amount to an amount not to exceed the maximum amount that can be Guaranteed by the applicable Guarantor without rendering such Guaranty voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. 5.16 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Company shall not, and shall not cause or permit any Guarantor Subsidiary to, and no Guarantor Subsidiary -60- (other than any Guarantor Subsidiary whose Guaranty is to be released in accordance with the terms of the Guaranty and the Indebtedness in connection with Section 5.6) shall consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, its assets substantially as an entirety to, any Person (other than, in the case of a Guarantor Subsidiary, to the Company or any other Guarantor Subsidiary), unless: (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company or, in the case of a Guarantor Subsidiary, the Company or a Guarantor Subsidiary) shall expressly assume, by an agreement executed and delivered to the Administrative Agent and the Lenders, in form satisfactory to the Administrative Agent, all the obligations of the Company under the Notes and this Agreement or of a Guarantor Subsidiary under the applicable Guaranty, as applicable; (ii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of such Successor Company or any Subsidiary as a result of such transaction as having been Incurred by such Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction, the Successor Company will be able to Incur an additional $1.00 of Indebtedness pursuant to Section 5.3(a)(i) in the case of the Company or Section 5.3(a)(ii) in the case of a Guarantor Subsidiary; (iv) immediately after giving effect to such transaction, the Successor Company shall have Consolidated Net Worth in an amount that is not less than the Consolidated Net Worth of the Company or such Guarantor Subsidiary, as applicable, prior to such transaction minus any costs incurred in connection with such transaction; and (v) the Company or such Guarantor Subsidiary, as applicable, shall have delivered to the Administrative Agent a Certificate of a Responsible Official and -61- an Opinion of Counsel, each stating that such consolidation, merger or transfer comply with this Agreement. Opinion of counsel required to be delivered under this Section or elsewhere in this Agreement may have qualifications customary for opinions of the type required and counsel delivering such opinions of counsel may rely on certificates of the Company or government or other officials customary for opinions of the type required, including certificates certifying as to matters of fact. The Successor Company shall be the successor to the Company or the Guarantor Subsidiary, as applicable, and shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor Subsidiary, as applicable, under this Agreement, but the predecessor company, only in the case of a conveyance, transfer or lease, will not be released from the obligation to pay the principal of and interest on the Notes. Notwithstanding the foregoing, (i) any Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate incorporated for the purpose of reincorporating the Company in another jurisdiction to realize tax or other benefits. -62- ARTICLE VI CONDITIONS 6.1 CONDITIONS. The effectiveness of this Agreement and the obligations of each Lender hereunder are subject to the following conditions precedent: (a) The Administrative Agent shall have received all of the following, each of which shall be an original unless otherwise specified, each properly executed by a Responsible Official of each party thereto, each dated as of the Closing Date and each in form and substance satisfactory to the Administrative Agent and its legal counsel (unless otherwise specified or, in the case of the date of any of the following, unless the Administrative Agent otherwise agrees or directs): (i) executed counterparts of this agreement, sufficient in number for distribution to the Lenders and the Company; (ii) Notes executed by the Company in favor of each Lender in an amount equal to that Lender's Pro Rata Share; (iii) the Guaranty executed by each of the Guarantor Subsidiaries; (iv) a Certificate executed by a Responsible Official of each of the Company and each Guarantor Subsidiary, attaching a good standing certificate as to each such person and a resolution authorizing the transactions contemplated hereby, and certifying that there have been no amendments or other changes to the articles of incorporation, bylaws or other organizational papers of such Persons which have not been delivered to the Administrative Agent in connection with the Bank Credit Agreement (other than any amendments or other changes attached thereto) and setting forth exemplars of the signatures of all Persons authorized to sign the Loan Documents on behalf of each such Person; (v) the Opinion of Counsel; -63- (vi) a Certificate of a Responsible Official signed by a Senior Officer of the Company certifying that the conditions specified in Sections 6.1(b) through (g) of the Agreement have been satisfied; (vii) a Certificate of a Responsible Official of the Company signed by a Senior Officer thereof, certifying as to the Solvency of the Company and its Guarantor Subsidiaries as of the Closing Date; and (viii) the payment of all fees and expenses of the Administrative Agent required hereby or pursuant to the terms of the Agent's Letter. (b) As of the Closing Date, the representations and warranties contained in Article IV of this Agreement shall be true and correct; (c) As of the Closing Date, the Company and its Subsidiaries and any other Parties shall be in compliance with all the terms and provisions of the Loan Documents, and no Default or Event of Default shall have occurred and be continuing; (d) No material adverse change in the property, operations, business prospects, profits or financial condition of the Company and its Subsidiaries, taken as a whole, since December 31, 1997; (e) Following June 30, 1998, the Company shall have received not less than $14,550,000 in additional cash equity contributions from the Sponsors, pursuant to instruments, documents and agreements acceptable to the Administrative Agent in its sole discretion; (f) The Company shall have acquired (or shall concurrently acquire) substantially all of the assets of Caribbean Air Services, Inc. in accordance with the terms of the CAS Purchase Agreement and all applicable laws; (g) There shall not be then pending or threatened any action, suit, proceeding or investigation against or affecting the Company or any of its -64- Subsidiaries or any Property of any of them before any Governmental Agency that could reasonably be expected to have a Material Adverse Effect; (h) The Administrative Agent shall have timely received a Pricing Designation in compliance with Article II; and (i) The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent, such other assurances, certificates, documents or consents related to the foregoing as the Administrative Agent reasonably may require. -65- ARTICLE VII EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT 7.1 EVENTS OF DEFAULT. The existence or occurrence of any one or more of the following events, whatever the reason therefor and under any circumstances whatsoever, shall constitute an Event of Default: (a) The Company fails to pay any principal on any of the Notes, or any portion thereof, when due; or (b) The Company fails to pay any interest on any of the Notes or any fee or other amount payable by the Company to any of the Creditors under any Loan Document within thirty days after the date when due; or (c) The Company fails to comply with Section 5.16; or (d) The Company fails to comply for 30 days after the giving of notice to the Company by the Administrative Agent with any of Sections 5.3, 5.4, 5.6 or 5.11; or (e) The Company fails to comply for 60 days after the Company receives the notice specified below with any of its other agreements in this Agreement (other than those referred to in Sections 7.1(a) through (d) above); or (f) Indebtedness of the Company or any Significant Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $10,000,000 or its foreign currency equivalent at the time; or (g) The Company or any Significant Subsidiary of the Company pursuant to or within the meaning of any Debtor Relief Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case in which it is the debtor; -66- (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or (D) makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws having a similar effect or purpose as the Debtor Relief Laws; or (h) a court of competent jurisdiction enters an order or decree under any Debtor Relief Law that: (A) Is for relief against the Company or any Significant Subsidiary of the Company in an involuntary case; (B) appoints a Custodian of the Company or any Significant Subsidiary of the Company or for any substantial part of the property of the Company or Significant Subsidiary; or (C) orders the winding up or liquidation of the Company or any Significant Subsidiary of the Company; (or any similar relief is granted under any foreign laws having a similar effect or purpose as the Debtor Relief Laws) and the order or decree remains unstayed and in effect for 60 days; or (i) The rendering of any judgment or decree for the payment of money in excess of $10,000,000, or its foreign equivalent at the time, is entered against the Company or any Significant Subsidiary if such judgment or decree remains outstanding for a period of 60 days following entry of such judgment and is not discharged, bonded, waived or stayed, in each case within 30 days after notice thereof. 7.2 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other rights or remedies of the Administrative Agent or the Lenders provided for elsewhere in this Agreement, or the Loan Documents, or by applicable Law, or in equity, or otherwise, upon the occurrence, and during the continuance, of any Event of Default, all obligations of the Creditors and all rights of the Company and any other Parties under the Loan -67- Documents shall be suspended without notice to or demand upon the Company, which are expressly waived by the Company, EXCEPT that the Majority Lenders may waive the Event of Default, which waiver shall apply equally to, and shall be binding upon, all the Lenders. (a) Upon the occurrence of any Event of Default, the Administrative Agent shall, upon the direction of the Majority Lenders, without notice to (EXCEPT as expressly provided for in any Loan Document) or demand upon the Company, which are expressly waived by the Company (EXCEPT as to notices expressly provided for in any Loan Document), proceed in accordance with applicable Laws (but only with the consent of the Majority Lenders) to protect, exercise and enforce their rights and remedies under the Loan Documents against the Company, the Guarantor Subsidiaries and any other Party and such other rights and remedies as are provided by Law or equity. (b) The Administrative Agent shall have the right, in its sole discretion, to determine which rights and remedies it shall at any time pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of them or any of the Lenders' rights hereunder; and any moneys, deposits, receivables, balances or other property which may come into any Lender's or the Administrative Agent's possession at any time or in any manner, may be retained by such Lender or the Administrative Agent and applied to any of the Obligations as provided under any of the Loan Documents or as provided under applicable law. (c) The order and manner in which the Lenders' rights and remedies are to be exercised shall be determined by the Majority Lenders in their sole discretion, and all payments received by the Administrative Agent and the Lenders, or any of them, shall be applied first to the costs and expenses (including attorneys' fees and disbursements payable pursuant to Section 9.3) of the Administrative Agent, acting as Administrative Agent, and of the Lenders, and thereafter paid pro rata to the Lenders in the same proportions that the aggregate Obligations owed to each Lender under the Loan Documents bear to the aggregate Obligations owed under the Loan Documents to all the Lenders, without priority or preference among the Lenders. Regardless of how each Lender may treat payments for the purpose of its own accounting, for the purpose of computing the Obligations hereunder and under the Notes, payments shall be applied first, to the -68- costs and expenses of the Administrative Agent, acting as the Administrative Agent and the Lenders, as set forth above, second, to the payment of accrued and unpaid interest due under any Loan Documents to and including the date of such application (ratably, and without duplication, according to the accrued and unpaid interest due under each of the Loan Documents), and third, to the payment of all other amounts (including principal and fees) then owing to the Administrative Agent or the Lenders under the Loan Documents. No application of payments will cure any Event of Default, or prevent acceleration, or continued acceleration, of amounts payable under the Loan Documents, or prevent the exercise, or continued exercise, of rights or remedies of the Lenders hereunder or thereunder or at law or in equity. -69- ARTICLE VIII THE ADMINISTRATIVE AGENT 8.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably appoints ING Capital as Administrative Agent, and authorizes ING Capital to take such action as agent on that Lender's behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof or are reasonably incidental thereto, as determined by the Administrative Agent. This appointment and authorization is intended solely for the purpose of facilitating the servicing of the Loan and does not constitute appointment of the Administrative Agent as trustee for any Lender or as representative of any Lender for any other purpose and, EXCEPT as specifically set forth in the Loan Documents to the contrary, the Administrative Agent shall each take such action and exercise such powers only in an administrative and ministerial capacity. The Administrative Agent is a representative of the Lenders only and assumes no agency, trust, fiduciary or other special relationship with any other party hereto, express or implied. 8.2 ADMINISTRATIVE AGENT AND AFFILIATES. ING Capital (and each successor Administrative Agent has the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were not the Administrative Agent. The term "Lender" or "Lenders" includes ING Capital in its individual capacity. ING Capital (and each successor Administrative Agent) and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Company or any Affiliate of the Company as if it were not the Administrative Agent, and without any duty to account therefor to the Lenders. No implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. 8.3 PROPORTIONATE INTEREST OF THE LENDERS IN ANY COLLATERAL. The Administrative Agent, on behalf of all the Lenders, shall hold in accordance with the Loan Documents all items of any collateral or interests therein received or held by the Administrative Agent. Subject to the Administrative Agent's and the Lenders' rights to reimbursement for their costs and expenses hereunder (INCLUDING attorneys' fees and disbursements and other professional services) and subject to the application of payments in accordance with Section 7.2(c), each Lender shall have an interest in any collateral or -70- interests therein in the same proportions that the aggregate Obligations owed such Lender under the Loan Documents bear to the aggregate Obligations owed under the Loan Documents to all the Lenders, without priority or preference among the Lenders. 8.4 LENDERS' CREDIT DECISIONS. Each Lender agrees that it has, independently and without reliance upon the Administrative Agent, any other Lender or the directors, officers, agents, employees or attorneys of the Administrative Agent or any other Lender, and instead in reliance upon information supplied to it by or on behalf of the Company and its Subsidiaries and upon such other information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement. Each Lender also agrees that it shall, independently and without reliance upon the Administrative Agent, any other Lender or the directors, officers, agents, employees or attorneys of the Administrative Agent or any other Lender, continue to make its own independent credit analyses and decisions in acting or not acting under the Loan Documents. 8.5 ACTION BY ADMINISTRATIVE AGENT. (a) The Administrative Agent may assume that no Default or Event of Default has occurred and is continuing, unless the Administrative Agent has received notice from the Company stating the nature of the Default or has received notice from a Lender stating the nature of the Default or Event of Default and that such Lender considers the Default to have occurred and to be continuing. (b) The Administrative Agent has only those obligations under the Loan Documents as are expressly set forth therein. (c) Except for any obligation expressly set forth in the Loan Documents and as long as the Administrative Agent may assume that no Default or Event of Default has occurred and is continuing, the Administrative Agent may, but shall not be required to exercise its discretion to act or not act, EXCEPT that the Administrative Agent shall be required to act or not act upon the instructions of the Majority Lenders (or of all the Lenders, to the extent required by Section 9.2) and those instructions shall be binding upon the Administrative Agent and all the Lenders, PROVIDED that the Administrative Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to applicable Law or - 71 - would result, in the reasonable judgment of the Administrative Agent in substantial risk of liability to the Administrative Agent. (d) If the Administrative Agent has received a notice specified in Section 8.5(a), the recipient of such notice shall immediately give notice thereof to the Lenders and shall act or not act upon the instructions of the Majority Lenders (or of all the Lenders, to the extent required by Section 9.2), PROVIDED that the Administrative Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to applicable Law or would result, in the reasonable judgment of the Administrative Agent, in a substantial risk of liability to the Administrative Agent. (e) The Administrative Agent shall not have any liability to any Lender for acting, or not acting, as instructed by the Majority Lenders (or all the Lenders, if required under Section 9.2), notwithstanding any other provision hereof. 8.6 LIABILITY OF ADMINISTRATIVE AGENT. Neither the Administrative Agent nor any of its directors, officers, agents, employees or attorneys shall be liable for any action taken or not taken by them under or in connection with the Loan Documents, EXCEPT for their own gross negligence or willful misconduct. Without limitation on the foregoing, the Administrative Agent and its directors, officers, agents, employees and attorneys: (a) May treat the payee of any Note as the holder thereof until the Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to the Administrative Agent, signed by the payee, and may treat each Lender as the owner of that Lender's interest in the Obligations for all purposes of this Agreement until the Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to the Administrative Agent, signed by that Lender. (b) May consult with legal counsel (INCLUDING internal legal counsel), accountants (INCLUDING internal accountants) and other professionals or experts selected by it, or with legal counsel, accountants or other professionals or experts for the Company or its Subsidiaries or the Lenders, and shall not be liable - 72 - for any action taken or not taken by it in good faith in accordance with any advice of such legal counsel, accountants or other professionals or experts. (c) Shall not be responsible to any Lender for any statement, warranty or representation made in any of the Loan Documents or in any notice, certificate, report, request or other statement (written or oral) given or made in connection with any of the Loan Documents. (d) EXCEPT to the extent expressly set forth in the Loan Documents, shall have no duty to ask or inquire as to the performance or observance by the Company or its Subsidiaries of any of the terms, conditions or covenants of any of the Loan Documents or to inspect any collateral or the Property books or records of the Company or its Subsidiaries. (e) Will not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, effectiveness, sufficiency or value of any Loan Document, any other instrument or writing furnished pursuant thereto or in connection therewith, or any collateral. (f) Will not incur any liability by acting or not acting in reliance upon any Loan Document, notice, consent, certificate, statement, request or other instrument or writing believed by it to be genuine and signed or sent by the proper party or parties. (g) Will not incur any liability for any arithmetical error in computing any amount paid or payable by the Company or any Subsidiary or Affiliate thereof or paid or payable to or received or receivable from any Lender under any Loan Document, INCLUDING, without limitation, principal, interest and other amounts; PROVIDED that, promptly upon discovery of such an error in computation, the Creditors and (to the extent applicable) the Company or its Subsidiaries or Affiliates shall make such adjustments as are necessary to correct such error and to restore the parties to the position that they would have occupied had the error not occurred. 8.7 INDEMNIFICATION. Each Lender shall, ratably in accordance with its Pro Rata Share, indemnify and hold the Administrative Agent and its directors, officers, agents, employees and attorneys harmless against any and all liabilities, obligations, - 73 - losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature, whatsoever (INCLUDING, without limitation, attorneys' fees and disbursements) that may be imposed on, incurred by or asserted against it or them in any way relating to or arising out of the Loan Documents (other than losses incurred by reason of the failure of the Company to pay the indebtedness represented by the Notes) or any action taken or not taken by it as Administrative Agent thereunder, EXCEPT such as result from its own gross negligence or willful misconduct. Without limitation on the foregoing, each Lender shall reimburse the Administrative Agent upon demand for that Lender's ratable share of any cost or expense incurred by the Administrative Agent in connection with the negotiation, preparation, execution, delivery, amendment, waiver, restructuring, reorganization (INCLUDING a bankruptcy reorganization), enforcement or attempted enforcement of the Loan Documents, to the extent that the Company or any other Party is required by Section 9.3 to pay that cost or expense but fails to do so upon demand. Nothing in this Section shall entitle the Administrative Agent to recover any amount from the Lenders if and to the extent that such amount has theretofore been recovered from the Company or any of its Subsidiaries. 8.8 SUCCESSOR ADMINISTRATIVE AGENT. If the Administrative Agent determines that for it to continue as Administrative Agent would result in a conflict of interest, or would create an unacceptable risk of significant liability of the Administrative Agent or to a third party, or would otherwise be inadvisable under prevailing standards of banking prudence, it may resign as such at any time upon prior written notice to the Company and the Lenders, to be effective upon a successor's acceptance of appointment as Administrative Agent. The Administrative Agent may also resign as such absent such a determination by it with the consent of the Company, which shall not be unreasonably withheld, to be likewise effective. If the Administrative Agent so resigns, (a) the Majority Lenders shall appoint a successor Administrative Agent, who must be from among the Lenders and be reasonably acceptable to the Company, PROVIDED that any resigning Administrative Agent shall be entitled to appoint a successor Administrative Agent from among the Lenders, subject to acceptance of appointment by that successor Administrative Agent, if the Majority Lenders have not appointed a successor within 30 days after the date the resigning Administrative Agent gave notice of resignation; - 74 - (b) upon a successor's acceptance of appointment as Administrative Agent the successor will thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Administrative Agent; (c) upon the effectiveness of any resignation, the resigning Administrative Agent thereupon will deliver to the successor Administrative Agent, all Records and all other books and records related to its former role as Administrative Agent; and (d) upon the delivery of those items specified in Section 8.8(c), the resigning Administrative Agent thereupon will be discharged from its duties and obligations thereafter arising under the Loan Documents other than obligations arising as a result of any action or inaction of the resigning Administrative Agent prior to the effectiveness of such resignation. 8.9 NO OBLIGATIONS OF THE COMPANY. Nothing contained in this Article VIII shall be deemed to impose upon the Company any obligation with respect to the due and punctual performance by the Administrative Agent of its obligations to the Lenders under any provision of this Agreement and the Company shall have no liability to the Administrative Agent or any of the Lenders with respect to any failure by the Administrative Agent or any Lender to perform any of its obligations to the Administrative Agent or the Lenders under this Agreement. Without limiting the generality of the foregoing, where any provision of this Agreement relating to the payment of any amounts due and owing under the Loan Documents provides that such payments shall be made by the Company to the Administrative Agent for the account of the Lenders, the Company's obligations to the Lenders with respect to such payments shall be deemed to be satisfied upon the making of such payments to the Administrative Agent in the manner provided by this Agreement. - 75 - ARTICLE IX MISCELLANEOUS 9.1 CUMULATIVE REMEDIES: NO WAIVER. The rights, powers, privileges and remedies of the Creditors provided herein or in any Note or other Loan Document are cumulative and not exclusive of any right, power, privilege or remedy provided by Law or equity. No failure or delay on the part of any Creditor in exercising any right, power, privilege or remedy may be, or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right, power, privilege or remedy preclude any other or further exercise of the same or any other right, power, privilege or remedy. The terms and conditions of Article VIII (other than Section 8.8 and 8.9) are inserted for the sole benefit of the Creditors; the same may be waived in whole or in part, with or without terms or conditions. 9.2 AMENDMENT: CONSENTS. No amendment, modification, supplement, extension, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, and no consent to any departure by the Company or any other Party therefrom, may in any event be effective unless in writing signed by the Administrative Agent with the approval in writing of the Majority Lenders, and then only in the specific instance and for the specific purpose given; and, without the approval in writing of all the Lenders, no amendment, modification, supplement, termination, waiver or consent may be effective: (a) To amend or modify the principal of, or the amount of principal, principal prepayments or the rate of interest payable on, any Note, or the amount of any fee payable to any Lender under the Loan Documents; (b) To postpone any date fixed for any payment of principal of, prepayment of principal of or any installment of interest on, any Note, or to extend the Maturity Date; (c) To amend or modify the provisions of (but not to grant a waiver under) the definition of "Majority Lenders"; Articles VI or VII; or this Section; or (d) To amend or modify any provision of this Agreement that expressly requires the consent or approval of all the Lenders. - 76 - Any amendment, modification, supplement, termination, waiver or consent pursuant to this Section shall apply equally to, and shall be binding upon, all the Lender and the Administrative Agent. No amendment, modification, supplement, termination, waiver or consent which has a negative effect upon, or increases the obligations or liabilities of the Administrative Agent, may be effective without the consent of the Administrative Agent. 9.3 COSTS, EXPENSES AND TAXES. The Company shall each pay on demand the reasonable costs and expenses of the Administrative Agent in connection with the negotiation, preparation, execution and delivery of the Loan Documents, and of the Administrative Agent and the Lenders in connection with the amendment, waiver, refinancing, restructuring, reorganization (INCLUDING a bankruptcy proposal, plan of arrangement or reorganization) and enforcement or attempted enforcement of the Loan Documents, and any matter related thereto, INCLUDING, without limitation, filing fees, recording fees, title insurance fees, appraisal fees, search fees approved by the Company and other out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any legal counsel, independent public accountants and other outside experts retained by the Administrative Agent INCLUDING, without limitation, any costs, expenses or fees incurred or suffered by the Administrative Agent or any Lender in connection with or during the course of any bankruptcy or insolvency proceedings or proceedings under any Debtor Relief Law of the Company or any of its Subsidiaries; PROVIDED that the Administrative Agent and the Lenders shall, in connection with any such amendment, waiver, refinancing, restructuring, reorganization, enforcement or attempted enforcement of the Loan Documents be entitled to the services of only one firm of independent public accountants and shall use their best efforts to avoid duplicative efforts by legal counsel on behalf of Administrative Agent, and one or more Lenders. The Company shall pay any and all documentary and other taxes (other than income or gross receipts taxes generally applicable to banks) and all costs, expenses, fees and charges payable or determined to be payable in connection with the filing or recording of this Agreement, any other Loan Document or any other instrument or writing to be delivered hereunder or thereunder, or in connection with any transaction pursuant hereto or thereto, and shall reimburse, hold harmless and indemnify the Creditors from and against any and all loss, liability or legal or other expense with respect to or resulting from any delay in paying or failure to pay any tax, cost, expense, fee or charge or that any of them may suffer or incur by reason of the failure of any Party to perform any of its Obligations. Any amount payable to the - 77 - Administrative Agent or any Lender under this Section shall bear interest at the rate of interest for Base Rate Tranches from the thirtieth day after a demand for payment. 9.4 NATURE OF LENDERS' OBLIGATIONS. The obligations of the Lenders hereunder are several and not joint or joint and several. Nothing contained in this Agreement or any other Loan Document and no action taken by the Administrative Agent or the Lenders or any of them pursuant hereto or thereto may, or may be deemed to, make the Lenders a partnership, an association, a joint venture or other entity, either among themselves or with the Company or any Affiliate of the Company. Each Lender's obligation to make its Pro Rata Share of the Loan is several and not joint or joint and several. A default by any Lender will not increase the Pro Rata Share of any other Lender. 9.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained herein or in any other Loan Document, or in any certificate or other writing delivered by or on behalf of any one or more of the Parties to any Loan Document, will survive the making of the Loan hereunder and the execution and delivery of the Notes, and have been or will be relied upon by the Administrative Agent and each Lender, notwithstanding any investigation made by the Administrative Agent or any Lender or on their behalf. 9.6 NOTICES. EXCEPT as otherwise expressly provided in the Loan Documents: (a) All notices, requests, demands, directions and other communications provided for hereunder or under any other Loan Document must be in writing and must be telecopied (followed within 48 hours by an original of such notice, request, demand, direction or other communication delivered in via one of the other methods specified in this Section, hand-delivered or sent by reputable overnight carrier for next-day delivery, addressed to the appropriate party at the address set forth on the signature pages of this Agreement or other applicable Loan Document or, as to any party to any Loan Document, at any other address as may be designated by it in a written notice sent to all other parties to such Loan Document in accordance with this Section. (b) Except as otherwise expressly provided in any Loan Document, if any notice, request, demand, direction or other communication required or permitted by any Loan Document is given by telecopier, when sent, or - 78 - if given by personal delivery, when delivered, or if given by reputable overnight carrier for next-day delivery, on the next Business Day following the date of delivery to such carrier. 9.7 EXECUTION OF LOAN DOCUMENTS. Unless the Administrative Agent otherwise specifies with respect to any Loan Document and except as specifically provided in any other Loan Document, this Agreement and any other Loan Document may be executed in any number of counterparts and any party hereto or thereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts of this Agreement or any other Loan Document, as the case may be when taken together will be deemed to be but one and the same instrument. The execution of this Agreement or any other Loan Document (except as specifically provided in such other Loan Document) by any party hereto or thereto will no become effective until counterparts hereof or thereof, as the case may be, have been executed by all the parties hereto or thereto. 9.8 BINDING EFFECT; ASSIGNMENT. (a) This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the Company and the Creditors, and their respective successors and assigns, EXCEPT that the Company and its Affiliates may not assign their rights hereunder or thereunder or any interest herein or therein without the prior written consent of all the Lenders. Each Lender shall have the right to sell or transfer any participation interest in this Agreement, its Note and its Pro Rata Share in accordance with the provisions of this Section. Each Lender represents that it is not acquiring its Note with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (subject to any requirement that disposition of its Notes must be within the control of such Lender). (b) Any Lender may assign all or any portion of its Pro Rata Share to a bank or other financial institution reasonably acceptable to the Administrative Agent and the Company; PROVIDED that (i) such assignment shall be evidenced by an Assignment and Acceptance; - 79 - (ii) such assignment (except to an assignee which is then a Lender) shall be in an integral multiple of $100,000 which is not less than $2,500,000; (iii) such assignee has a minimum net worth of $200,000,000; (iv) the Administrative Agent consents to such assignment and has received the payment of an assignment fee from such assignee (for its sole account) of $3500; and (v) unless an Event of Default has occurred and remains continuing, the Company consents to such assignment (such consent not to be unreasonably withheld). Upon the execution and delivery of the Assignment and Acceptance, each assignee financial institution named therein shall be a Lender for all purposes of this Agreement, with the respective Pro Rata Share therein set forth and, to the extent of such Pro Rata Share, the assigning Lender shall be released from its Obligations under this Agreement. The Company agrees that it shall execute and deliver (against delivery by the assigning Lender to the Company of its Note) to each such assignee financial institution Note evidencing that assignee's Pro Rata Share and to the assigning Lender, Notes evidencing the remaining such Pro Rata Share retained by the assigning Lender. Upon request by any such assignee financial institution, the Company shall also provide to that assignee financial institution such original or conformed copies of documents described in Section 6.1(a) as may be requested by that assignee financial institution, and shall execute and deliver such instruments, documents and confirmations, including for the purposes of protecting and preserving in favor of such assignee, any of the Liens of the Administrative Agent and Lenders as may be requested. (c) By executing and delivering an Assignment and Acceptance, the assignee financial institution thereunder acknowledges and agrees that: (i) other than the representation and warranty that it is the legal and beneficial owner of the Pro Rata Share being assigned thereby free and clear of an adverse claim, the assigning Lender has made no - 80 - representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of this Agreement or any other Loan Document; (ii) the assigning Lender has made no representation or warranty and assumes no responsibility with respect to the financial condition of the Company and its Restricted Subsidiaries or the performance by the Company of the Obligations; (iii) it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to this Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) it will, independently and without reliance upon the Administrative Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) it appoints and authorizes the Administrative Agent to take such action and to exercise such powers under this Agreement as are delegated to the Administrative Agent by Article VIII; and (vi) it will perform in accordance with their terms all of the Obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) The Administrative Agent shall maintain at the Administrative Agent's Office a copy of each Assignment and Acceptance delivered to it and a register for recordation of the names and addresses of the Lenders and their respective Pro Rata Shares. The entries in such register shall be conclusive, in the absence of manifest error, and the Company and the other Creditors may treat each Person whose name is recorded in the register as a Lender hereunder for all purposes of this Agreement. Promptly following any entry in the -81- register, the Administrative Agent shall provide to the Company and the other Creditors a revised listing of each Lender's Pro Rata Share giving effect thereto. (e) Each Lender may from time to time without the consent of the Company or the Administrative Agent grant participations to one or more banks or other financial institutions in a portion of its Pro Rata Share; PROVIDED, HOWEVER, that (i) such Lender's obligations under this Agreement and each of the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Company and the Creditors shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and (iv) the consent of the holder of such participation interest shall not be required for amendments of waivers of provisions of the Loan Documents other than those that (A) increase the monetary amount of the outstanding Loans such that the participation interest would also increase, (B) extend any maturity date or any other date upon which any payment of money is due to the Lenders, or (C) reduce the rate of interest on the Notes, any fee or any other monetary amount payable to the Lenders in which such participant has a participating interest. (v) such participation interest shall be in a minimum amount of $1,000,000. -82- 9.9 SHARING OF SETOFFS. Each Lender severally agrees that (a) if it is a party to the Bank Credit Agreement, it shall not exercise any right of setoff, banker's lien or counterclaim against the Company by reason of the obligations under this Agreement at any time when any obligations are outstanding under the Bank Credit Agreement, and (b) if it, through the exercise of any right of setoff, banker's lien or counterclaim against the Company, or otherwise, receives payment of the Obligations held by it that is ratably more than any other Lender, through any means, receives in payment of the Obligations held by that Lender, then: (a) The Lender exercising the right of setoff, banker's lien or counterclaim or otherwise receiving such payment shall purchase, and shall be deemed to have simultaneously purchased, from the other Lender a participation in the Obligations held by the other Lender and shall pay to the other Lender a purchase price in an amount so that the share of the Obligations held by each Lender after the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment shall be in the same proportion that existed, prior to the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all of the Lenders share any payment obtained with respect to the Obligations ratably in accordance with each Lender's share of the Obligations immediately prior to, and without taking into account, the payment; PROVIDED that, if all or any portion of a disproportionate payment obtained, as a result of the exercise of the right of setoff, banker's lien, counterclaim or otherwise is thereafter recovered from the purchasing Lender by the Company or any Person claiming through or succeeding to the rights of the Company the purchase of a participation shall be rescinded and the purchase price thereof shall be restored to the extent of the recovery, but without interest. Each Lender that purchases a participation in the Obligations pursuant to this Section shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. The Company expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in an Obligation so purchased may exercise any and -83- all rights of setoff, banker's lien or counterclaim with respect to the participation as fully as if the Lender were the original owner of the Obligation purchased. 9.10 INDEMNITY. The Company agrees to indemnify, save and hold harmless each Creditor and their respective Affiliates, directors, officers, agents, attorneys and employees (collectively, the "INDEMNITEES") from and against: (a) Any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than another Creditor) if the claim, demand, action or cause of action directly or indirectly relates to a claim, demand, action or cause of action that such Person asserts or may assert against the Company, any Affiliate thereof or any officer, director or shareholder of the Company or its Affiliates; (b) Any and all claims, demands, actions or causes of action if the claim, demand, action or cause of action arises out of or relates to the use or contemplated use of proceeds of the Loan, or the relationship of the Company and the Lenders under this Agreement; (c) Any and all claims, demands, actions or causes of action if the claim, demand, action or cause of action arises out of or relates to any failure of the Company or any of its Subsidiaries to comply with any tax Law, including without limitation, any failure to pay or remit any withholding taxes; (d) Any administrative or investigative proceeding by any Governmental Agency arising out of or related to a claim, demand, action or cause of action described in clauses (a), (b) or (c) above; and (e) Any and all liabilities, losses, costs or expenses (INCLUDING reasonable attorneys' fees and disbursements and other professional services) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action or cause of action; PROVIDED that no Indemnitee shall be entitled to indemnification for any loss caused by its own gross negligence or willful misconduct. If any claim, demand, action or cause of action is asserted against any Indemnitee, such Indemnitee shall promptly notify the Company, but the failure to so promptly notify the Company shall not affect the -84- Company's obligations under this Section unless such failure materially prejudices the Company's right to participate in the contest of such claim, demand, action or cause of action, as hereinafter provided. Each Indemnitee may, and if requested by the Company in writing shall, in good faith contest the validity, applicability and amount of such claim, demand, action or cause of action with counsel selected by such Indemnitee and reasonably acceptable to the Company, and shall permit the Company to participate in such contest. Any Indemnitee that proposes to settle or compromise any claim or proceeding for which the Company may be liable for payment of indemnity hereunder shall give the Company written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising such claim or proceeding and shall obtain the Company's prior consent, which consent shall not unreasonably be withheld. In connection with any claim, demand, action or cause of action covered by this Section against more than one Indemnitee, all such Indemnitees shall be represented by the same legal counsel selected by the Indemnitees and reasonably acceptable to the Company; PROVIDED, that if such legal counsel determines in good faith that representing all such Indemnitees would or could result in a conflict of interest under Laws or ethical principles applicable to such legal counsel or that a defense or counterclaim is available to an Indemnitee that is not available to all such Indemnitees, then to the extent reasonably necessary to avoid such a conflict of interest or to permit unqualified assertion of such a defense or counterclaim, each Indemnitee shall be entitled to separate representation by legal counsel selected by that Indemnitee and reasonably acceptable to the company. Any obligation or liability of the Company and the Company to any Indemnitee under this Section shall survive the expiration or termination of this Agreement and the repayment of the Loan and the payment and performance of all other Obligations owed to the Lenders; PROVIDED, however, that such obligations or liabilities shall not, from and after the date on which the Notes are fully paid, be deemed Obligations for any purpose under the Loan Documents. 9.11 NONLIABILITY OF THE LENDERS. The Company acknowledges and agrees that: (a) Any inspections of any Property of the Company and its Subsidiaries made by or through the Administrative Agent or the Lenders are for purposes of administration of the Loan Documents only and the Company and its Subsidiaries are not entitled to rely upon the same; -85- (b) By accepting or approving anything required to be observed, performed, fulfilled or given to the Administrative Agent or the Lenders pursuant to the Loan Documents, neither the Administrative Agent nor the Lenders shall be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance or approval thereof shall not constitute a warranty or representation to anyone with respect thereto by the Administrative Agent or the Lenders; (c) The relationship between the Company and the Creditors is, and shall at all times remain, solely that of a borrower and lenders; and no Creditor shall under any circumstances be construed to be partners or joint venturers of the Company or its Affiliates; no Creditor shall under any circumstance be deemed to be in a relationship of confidence or trust or a fiduciary relationship with the Company or its Affiliates, or to owe any fiduciary duty to the Company or its Affiliates; no Creditor undertakes or assumes any responsibility or duty to the Company or its Affiliates to select, review, inspect, supervise, pass judgment upon or inform the Company or its Affiliates of any matter in connection with their Property or the operations of the Company or its Affiliates; the Company and its Affiliates shall rely entirely upon their own judgment with respect to such matters and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by the Administrative Agent or the Lenders in connection with such matters is solely for the protection of the Administrative Agent and the Lenders and neither the Company nor any other Person is entitled to rely thereon; and (d) No Creditor shall be responsible or liable to any Person for any loss, damage, liability or claim of any kind relating to injury or death to Persons or damage to Property or other loss, damage, liability or claim caused by the actions, inaction or negligence of the Company hereby indemnities and holds each Creditor harmless from any such loss, damage, liability or claim. 9.12 NO THIRD PARTIES BENEFITED. This Agreement is made for the purpose of defining and setting forth certain obligations, rights and duties of the Company and the Creditors in connection with the Obligations, and is made for the sole benefit of the Company and the Creditors and the Creditors' respective successors and assigns. EXCEPT as provided in Sections 9.8 and 9.11, no other person shall have any rights of any nature hereunder or by reason hereof. -86- 9.13 CONFIDENTIALITY. Each Creditor agrees to hold any confidential information that it may receive from the Company and its Restricted Subsidiaries pursuant to this Agreement in confidence, EXCEPT for disclosure; (a) to other Creditors; (b) to legal counsel, accountants and other professional advisors to the Company and its Subsidiaries or any Creditor; (c) to regulatory officials having jurisdiction over the Creditors; (d) as required by Law or legal process (PROVIDED that in the event any Creditor is so required to disclose any such confidential information, that Creditor shall endeavor promptly to notify the Company, so that the Company may seek a protective order or other appropriate remedy) or in connection with any legal proceeding to which any Creditor and the Company are adverse parties; (e) to another financial institution in connection with a disposition or proposed disposition to that financial institution of all or part of that Creditor's interests hereunder or a participation interest in its Notes, provided that such disclosure is made subject to an appropriate confidentiality agreement on terms substantially similar to this Section and (f) to prospective purchasers of any collateral (OTHER than competitors of the Company or its Subsidiaries unless all the Indebtedness evidenced by the Notes is then due and payable) in connection with any disposition thereof, PROVIDED that such disclosure is made subject to an appropriate confidentiality agreement on terms substantially similar to this Section. For purposes of the foregoing, "confidential information" shall mean all information respecting the Company or its Subsidiaries, OTHER THAN (g) information previously filed with any Governmental Agency and available to the public, -87- (h) information previously published in any public medium from a source other than, directly or indirectly, that Creditor and (i) information previously disclosed by the Company or any of its Subsidiaries to any Person not associated with the Company without a written confidentiality agreement. Nothing in this Section shall be construed to create or give rise to any fiduciary duty on the part of any Creditor to the Company or its Subsidiaries. 9.14 INTEGRATION. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control and govern; PROVIDED that the inclusion of supplemental rights or remedies in favor of the Creditors in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint, participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 9.15 GOVERNING LAW. EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED THEREIN, EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. 9.16 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that is held to be inoperative, unenforceable or invalid as to any party or in any jurisdiction shall, as to that party or jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions or the operation, enforceability or validity of that provision as to any other party or in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.17 INDEPENDENT REPRESENTATIONS, WARRANTIES, AND COVENANTS. Each representation, warranty, and covenant in Articles IV and V is independent of the other representations, warranties, land covenants in those Articles; the breach of any such -88- representation, warranty, or covenant shall not be excused by the fact that the circumstances underlying such breach would be permitted by another such representation, warranty or covenant. 9.18 HEADINGS. Article and Section headings in this Agreement and the other Loan Documents are included for convenience of reference only and are not part of this Agreement or the other Loan Documents for any other purpose. 9.19 TIME OF THE ESSENCE. Time is of the essence in the Loan Documents. 9.20 SUBMISSION TO JURISDICTION. Any legal action or proceeding with respect to this Agreement or any other Loan Document and any action for enforcement of any judgment in respect thereof may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Agreement, the Company hereby accepts for itself and with respect to its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and appellate courts from any thereof. The Company irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to that Person at its address set forth opposite its signature below. The Company hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Loan Document brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of the Creditors or any other Person to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. 9.21 PURPORTED ORAL AMENDMENTS. THE COMPANY AND THE CREDITORS EXPRESSLY ACKNOWLEDGE THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 12.2. THE COMPANY AND EACH CREDITOR AGREES THAT THEY WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE COMPANY OR -89- ANY CREDITOR THAT DOES NOT COMPLY WITH SECTION 12.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THE AGREEMENT OF THE OTHER LOAN DOCUMENTS. 9.22 REPLACEMENT OF A LENDER. Each Lender agrees that if requested by the Company, it will assign its Note to a willing lender designated by the Company, and reasonably acceptable to the Administrative Agent, if, within 90 days of such request, that Lender has claimed material compensation pursuant to Section 3.3 (but only if the impositions referred to therein are not imposed generally on commercial banks) or if, within 90 days of such request, the Company has become obligated for any material amount with respect to that Lender pursuant to Section 3.5(d) or such Lender is unable to make or maintain Eurodollar Tranches. 9.23 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY TRIAL COURT WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT [Remainder of this page intentionally left blank] -90- OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. The Company: GEOLOGISTICS CORPORATION By:______________________________ Terry Clarke, Vice President Address: 330 S. Mannheim Road Hillside, IL 60162 Telecopy: 708/547-2124 Telephone: 708/547-2000 LENDERS: ING (U.S.) CAPITAL CORPORATION, individually and as Administrative Agent By:__________________________________ Michael W. Adler, Managing Director Address: 333 South Grand Avenue, Suite 4200 Los Angeles, California 90071 Attn.: Michael W. Adler Managing Director Telecopy: (213) 346-3991 Telephone: (213) 346-3900 -91- EX-10.28 10 EXHIBIT 10.28 EXHIBIT 10.28 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and entered into as of July 13, 1998, by and between GeoLogistics Corporation, a Delaware corporation (the "COMPANY"), and each of the Investors listed on EXHIBIT A hereto (singularly an "INVESTOR" and collectively, the "INVESTORS"). In consideration of the agreements and mutual covenants set forth herein, the parties hereby agree as follows: SECTION 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings, and capitalized terms not otherwise defined herein have the meanings assigned to them in that certain Fourth Amended and Restated Stockholders Agreement dated as of July 10, 1998, among the Company and the Investors, as the same may be modified or amended from time to time: "AFFILIATE" of a Holder means any Person which directly or indirectly controls, is controlled by, or is under common control with such Holder. "Control," "controlled by" and "under common control with" means direct or indirect possession of the power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise); PROVIDED that control shall be conclusively presumed when any Person or entity or affiliated group directly or indirectly owns ten percent (10%) or more of the securities having ordinary voting power for the election of a majority of the directors of a corporation. "AGREEMENT" shall have the meaning assigned to such term in the introductory paragraph hereof. "COMMISSION" means the Securities and Exchange Commission, or any other federal agency then administering the Securities Act and the Exchange Act. "COMMON STOCK" means the common stock of the Company, par value $.001 per share, issuable upon liquidation or redemption of Preferred Stock or upon the sale, transfer or exchange of Preferred Stock to the Company by the Holders. "COMPANY" shall have the meaning assigned to such term in the introductory paragraph hereof. "CONTROLLING PERSON" shall have the meaning assigned to such term in SECTION 8. "CUTBACK" shall have the meaning assigned to such term in SECTION 3(c)(ii). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "FAMILY MEMBER" means any Holder's spouse, siblings, children, children's spouses, grandchildren or their spouses or any trusts for the benefit of any of the foregoing. "HOLDER" means any Investor who holds any shares of Preferred Stock or Common Stock entitled to registration rights hereunder. "INDEMNIFIED PARTY" shall have the meaning assigned to such term in SECTION 8. "INDEMNIFYING PARTY" shall have the meaning assigned to such term in SECTION 8. "LOSSES" means all losses, claims, damages or liabilities (other than consequential damages or incidental lost profits) and reasonable costs and expenses related thereto. "OCM" means OCM Principal Opportunities Fund, L.P., a Delaware limited partnership. "OCM AFFILIATE" means any investor in or any employee of OCM, TCW Asset Management Company, a California corporation ("TAMCO"), Trust Company of the West, a California trust company ("TRUSTCO") or Oaktree Capital Management, LLC ("OAKTREE"), a California limited liability company, or in any company, joint venture, limited liability company, association or partnership of which the OCM, TAMCO, Trustco or Oaktree, is a shareholder, manager or general partner, as the case may be. - 2 - "PERSON" shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or agency or political subdivision thereof. "PREFERRED STOCK" means the preferred stock, $.001 par value per share, of the Company. "REGISTRATION EXPENSES" shall have the meaning assigned to such term in SECTION 7(a). "SECURITIES" means the Common Stock and the Preferred Stock. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "SIMON ENTITY" means Logistical Simon, L.L.C., a Delaware limited liability company, WESINVEST, Inc., a Delaware corporation or William E. Simon & Sons, L.L.C., a Delaware limited liability company. "STOCKHOLDERS AGREEMENT" means the Fourth Amended and Restated Stockholders Agreement dated as of July 10, 1998 by and among the Company and each of the other Holders listed on EXHIBIT A thereto, as the same may be amended from time to time. "WES&S" means Logistical Simon, L.L.C., a Delaware limited liability company. "WES&S AFFILIATE" means any Simon Entity or any partnership, limited liability company or corporation that directly or indirectly, through one or more intermediaries, has control of, is controlled by or is under common control with (i) any Simon Entity or (ii) any shareholder, partner or member of a Simon Entity or any such shareholder's, partner's or member's spouse, siblings, children, children's spouses, grandchildren or their spouses or any trusts for the benefit of any of the foregoing. SECTION 2. ACKNOWLEDGEMENT OF RIGHTS. The Company will, upon request of a Holder, acknowledge in writing the Company's obligation in respect of the rights to which a Holder shall be entitled under this Agreement, PROVIDED that the failure - 3 - of a Holder to make any such request shall not affect the continuing obligation of the Company to the Holder in respect of such rights. SECTION 3. DEMAND REGISTRATION. (a) Subject to the limitations contained in SECTION 5 and SECTION 6, at any time following July 15, 2000 as Holders of not less than a majority of the issued and outstanding shares of Preferred Stock (the "DEMAND PERCENTAGE") shall give written notice to the Company requesting the registration of the transfer of such number of shares of Preferred Stock as shall be requested by such requesting Holder or Holders (the "DEMAND NOTICE"), and thereupon, the Company shall, as expeditiously as possible, prepare and file a registration statement under the Securities Act covering the shares specified in such Demand Notice, and shall use its best efforts to cause such registration statement to become effective, all in accordance with the provisions of this Agreement; PROVIDED that, subject to the provisions of SECTION 3(c) hereof, the Company shall be obligated to effect registration pursuant to this SECTION 3(a) no more than once. (b) Whenever the Company shall have received a demand pursuant to SECTION 3(a) above to effect the registration of any shares, the Company shall promptly give written notice to each other Holder and allow each such Holder the opportunity to participate in such registration. Each such Holder may, within ten (10) days after receipt of such notice, request in writing that all of such Holder's shares, or any portion thereof designated by such Holder, be included in the offering. (c) The Company shall proceed as expeditiously as possible after receipt of a demand pursuant to SECTION 3(a) above to file a registration statement and use its best efforts to effect, within ninety (90) days of the date of the Demand Notice, the registration of an offering under the Securities Act, such registration statement to be declared effective by the Commission not later than one hundred and eighty (180) days from the date of such Demand Notice under this SECTION 3. Such offering shall include: (i) the shares specified in the Demand Notice given pursuant to SECTION 3(a) above; and (ii) all shares that other Holders have requested be included in the offering pursuant to SECTION 3(b) above; all to the extent required to permit the Holders to dispose of such shares in compliance with applicable law; PROVIDED HOWEVER, - 4 - that if the managing underwriter of any such offering shall have determined that the inclusion of any shares pursuant to SECTION 3(b) above shall adversely affect the price, terms or number of securities to be underwritten and sold on behalf of the Holders initiating such demand registration pursuant to SECTION 3(a) above, then (x) the Company shall not be required to register any Securities pursuant to this Section 3 until such time as the Holders inform the Company that (1) such offering will not be an underwritten offering or (2) the managing underwriter has agreed that the inclusion of shares pursuant to SECTION 3(b) shall not adversely affect the price, terms or number of securities to be underwritten and sold on behalf of the Holders initiating such demand registration and (y) the Holders of the Demand Percentage shall be entitled to require the Company to file a registration statement with respect to the Securities notwithstanding the previous exercise of the rights of such Holders pursuant to this Section 3. (d) A registration statement filed pursuant to this SECTION 3 shall remain effective until the first to occur of (i) the sale of all of the shares registered under such registration statement or (ii) the date two years following the date such registration statement was declared effective by the Commission, excluding any periods during which the Commission shall have issued any stop order with respect to such registration statement. If the registration statement is part of a shelf offering, the Company shall be obligated to keep such registration statement effective for a period of not less than two years. (e) The Holders electing to participate in such offering shall have the right to select the managing underwriter to be engaged in connection with any such registration subject to the approval of the Company (which approval shall not be unreasonably withheld). Any such underwriter shall be a member firm of the New York Stock Exchange with a net capital of at least One-Hundred Million Dollars ($100,000,000). (f) If, at any time prior to the effectiveness of the registration statement referred to in this SECTION 3, the Holders initiating the Demand Notice in SECTION 3(a) above elect to withdraw such registration statement prior to its date of effectiveness, the Company shall promptly withdraw such registration statement prior to its effectiveness and such withdrawing Holders shall forfeit the foregoing demand registration rights referred to in SECTIONS 3(a) AND (b) above. Notwithstanding the foregoing, the demand registration rights referred to in SECTIONS 3(a) OR (b) above shall survive a pre-effectiveness election to withdraw as set forth in this SECTION - 5 - 3(f), if either (i) such withdrawing Holders reimburse the Company for all of its Registration Expenses in connection with the preparation of such withdrawn registration statement or (B) the non-demanding Holders elect to replace the withdrawing Holders (in which event such non-demanding Holders shall have been deemed to have exercised their demand registration right). (g) To the extent that any Holders electing a demand registration determine as of the contemplated offering date not to sell their shares pursuant to an underwritten offering and such Holders do not reimburse the Company for Registration Expenses in the event that no Registration Statement is declared effective, such Holders are nonetheless entitled to have their shares registered pursuant to a "shelf registration" for the time period set forth in SECTION 3(d) above. (h) The Company recognizes that money damages may be inadequate to compensate the Holders for a breach by the Company of its obligations under this Section, and the Company agrees that in the event of such a breach the Holder may apply for an injunction of specific performance or the granting of such other equitable remedies as may be awarded by a court of competent jurisdiction in order to afford the Holder the benefits of this SECTION 3 and that the Company shall not object to such application, entry of such injunction or granting of such other equitable remedies on the grounds that money damages will be sufficient to compensate the Holder. SECTION 4. PIGGYBACK REGISTRATION. (a) Except for a demand registration as set forth in Section 3 and subject to SECTIONS 5 AND 6, if at any time the Company proposes to register any offering of shares of its common stock under the Securities Act, and if such registration is to be on a form of the Commission that may include, or is at any time amended or changed to such a form that may include the shares of the Company's capital stock (other than (i) a registration on Form S-4 or S-8 or any successor form to such Forms, (ii) in connection with merger, acquisitions, exchange offers or comparable transactions, or (iii) any registration of securities as it relates to an offering and sale to management of the Company pursuant to any employee stock plan or other employee benefit plan arrangement), the Company will at any such time give written notice (a "PIGGYBACK NOTICE") to all Holders of Common Stock of its intention so to do at least thirty (30) days prior to the filing of said registration statement. (b) If the managing underwriter participating in the sale and distribution of the Company's securities covered by said - 6 - registration statement agrees that a certain number of shares of Common Stock (the "PERMISSIBLE SECONDARY SHARES") may be included in the offering covered by the registration statement, the Company's Piggyback Notice shall afford the Holders of Common Stock an opportunity to elect to include in such registration the Permissible Secondary Shares owned by them. Each Holder of Common Stock shall have twenty (20) days after receipt of the Company's Piggyback Notice to notify the Company in writing of the number of shares of Common Stock (the "ELECTED SHARES") which such Holder of Common Stock elects to include in the offering and such Elected Shares shall be included in the offering. If the aggregate number of Elected Shares that the Holders thereof desire to include in such filing exceeds the number of Permissible Secondary Shares, then each Holder of Common Stock electing to participate in such Piggyback Registration shall be subject to a reduction in the number of shares included in such registration on a pro-rata basis. Such managing underwriter may increase or decrease the number of Permissible Secondary Shares at any time until all shares included in such registration shall have been sold by such underwriters. SECTION 5. OPINION OF COUNSEL. The Company shall have no obligation under SECTIONS 3 AND 4 hereof to register any shares if the Company shall deliver to the requesting Holders an opinion of counsel in form and substance reasonably satisfactory to such Holders and their counsel to the effect that the proposed sale or disposition of all of the shares for which registration was requested does not require registration under the Securities Act for a sale or disposition in a single public transaction and the resale of such shares to any purchaser does not require registration under the Securities Act. The Company hereby agrees to indemnify the Holders against, and to hold them harmless from, all Losses arising from violations of law, that they may incur under the Securities Act or otherwise by reason of them proceeding in accordance with such opinion of counsel, other than (i) any such Losses that arise in connection with any willful misconduct on the part of such Holders or (ii) matters for which the Holders are obligated to indemnify the Company for under SECTION 8 hereof. SECTION 6. REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions of this Agreement to use its best efforts to effect the registration of any of the Securities under the Securities Act, the Company will (except as otherwise provided in this Agreement), as expeditiously as possible: (a) cooperate with any underwriters for, and the - 7 - sellers of, such shares, and will enter into a usual and customary underwriting and confidentiality agreements with respect thereto and take all such other reasonable actions as are necessary or advisable to permit, expedite and facilitate the disposition of such shares in the manner contemplated by the related registration statement in each case to the same extent as if all the securities then being offered were for the account of the Company and the Company will provide to any Holder, any underwriter participating in any distribution thereof pursuant to a registration statement, and any attorney, accountant or other agent retained by any Holder or underwriter, reasonable access to appropriate Company officers and employees to answer questions and to supply information reasonably requested by any such Holder, underwriter, attorney, accountant or agent in connection with such registration statement, so long as such person shall have executed a confidentiality agreement in form reasonably satisfactory to the Company; (b) furnish or cause to be furnished to each Holder, addressed to such Holder, a copy of the opinion of counsel for the Company, and a copy of the "comfort" letter signed by the independent public accountants who have certified the Company's financial statements included in the registration statement, delivered on the closing date to the underwriters of such shares; (c) prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective; and prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the time period required pursuant to this Agreement and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such registration statement whenever the Holders shall desire to sell or otherwise dispose of the same; PROVIDED that no such registration statement will be filed by the Company until counsel for the Holders shall have had a reasonable opportunity to review the same and to exercise their rights under clause (a) above with respect thereto and no amendment to any such registration statement naming such Holders as selling shareholders shall be filed with the Commission until such Holders shall have had at least seven days to review such registration statement as originally filed and theretofore amended, to exercise their rights under clause (a) above and to approve or disapprove any portion of such registration statement describing or referring to such Holders; - 8 - (d) furnish to each Holder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents (excluding marketing and other selling related materials), as such Holder may reasonably request in order to facilitate the public sale or other disposition of the securities owned by such Holder; (e) use its best efforts to register or qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each Holder shall request, except that the Company shall not for any such purpose be required to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified or to file therein any general consent to service; (f) in the event of the issuance of any stop order suspending the effectiveness of any registration statement or of any order suspending or preventing the use of any prospectus or suspending the qualification of any shares for sale in any jurisdiction, use its best efforts promptly to obtain its withdrawal; (g) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, beginning with the first fiscal quarter beginning after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; and (h) list such securities on any securities exchange on which any stock of the Company is then listed, if the listing of such securities is then permitted under the rules of such exchange; PROVIDED, HOWEVER, that notwithstanding any other provision of this Agreement, the Company shall not be required to maintain the effectiveness of any registration statement for a period in excess of two years (plus any period during which the effectiveness of such registration has been suspended), except that from time to time after a transfer of shares pursuant to a registration statement the Company will file all reports required to be filed by it under the Securities Act and the Exchange Act, and will take such further action as any Holder may reasonably request, all to the extent required to enable the Holder to sell shares pursuant to Rule 144 promulgated under the Securities Act (or any successor thereto). Upon written request, the Company - 9 - will promptly deliver to any Holder a written statement as to whether it has complied with such requirements at any time after it has become subject to such requirements. SECTION 7. REGISTRATION EXPENSES. (a) All expenses incident to the Company's performance of its obligations in connection with any registration of a Holder's shares under this Agreement including, without limitation, printing expenses, fees and disbursements of counsel for the Company, fees of the National Association of Securities Dealers, Inc. in connection with its review of any offering contemplated in any registration statement and expenses of any special audits which shall be necessary to comply with governmental requirements in connection with any such registration shall be paid by the Company. In connection with each registration the Company shall pay (i) all registration and filing fees for the Holders' shares under Federal and state securities laws, (ii) expenses of complying with the securities or blue sky laws of any jurisdictions pursuant to SECTION 6(e) hereof, and (iii) reasonable fees and expenses of no more than one counsel for the Holders (collectively, the "REGISTRATION EXPENSES"). The underwriting discount paid to the underwriters in connection with any registration shall be paid by the Company, the Holders and any other selling securities holders pro rata based on the ratio that the gross proceeds of the securities sold by each such participant bears to the aggregate gross proceeds of the underwritten securities sold by the Company, the Holders and such other securities holders; PROVIDED, HOWEVER, that the Company shall have no obligation to pay any other fees to, or reimburse expenses of, the underwriters hereunder. (b) It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Agreement in respect of the shares which are to be registered at the request of any Holder that such Holder shall furnish to the Company such information regarding the securities held by such Holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company. (c) The Company agrees that it will not file a registration statement under the Securities Act, either for securities held by any of the Company's securityholders, other than the Holders, or for securities newly issued by the Company, until thirty (30) days after the effective date of any registration statement filed pursuant to the request of Holders made under SECTION 3 hereof. - 10 - SECTION 8. INDEMNIFICATION. (a) In the event of any registration of any of its securities under the Securities Act pursuant to this Agreement, to the extent permitted by law, the Company shall indemnify and hold harmless the Holders, such Holders' directors, officers, employees and agents, and each other person, if any, who controls any such Holder within the meaning of the Securities Act (a "CONTROLLING PERSON"), against any Losses, joint or several, to which such Holder or any such director or officer or Controlling Person may become subject under the Securities Act or any other statute or at common law, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any alleged untrue statement of any material fact contained, on the effective date thereof, in any registration statement under which such securities were registered under the Securities Act, or in any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse each such Holder or such director, officer, employee, agent or Controlling Person for any legal or any other expenses reasonably incurred by such Holder or such director, officer, employee, agent or Controlling Person in connection with investigating or defending any Loss; PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the extent that any such Loss arises out of or is based upon any alleged untrue statement or alleged omission made in such registration statement, preliminary prospectus, prospectus, or amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such Holder specifically for use therein. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders or such director, officer, employee, agent or Controlling Person, and shall survive the transfer of shares by such Holder. (b) To the extent permitted by law, each Holder of any shares shall, by acceptance thereof, indemnify and hold harmless the Company, its directors, officers, employees and agents and each other person, if any, who controls the Company against any Losses, joint or several, to which the Company or any such director, officer, employee, agent or any such person may become subject under the Securities Act or any other statute or at common law, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or omission of any material fact contained, on the effective date thereof, in any registration statement under which such securities were registered under the Securities Act, or in any - 11 - preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent that such untrue statement or omission was contained in written information furnished to the Company through an instrument duly executed by such Holder specifically for use therein, and shall reimburse the Company or such director, officer, employee, agent or other person for any legal or any other expenses reasonably incurred in connection with investigating or defending any such Loss. (c) Indemnification similar to that specified in SECTIONS 8(A) AND 8(b) hereof shall be given by the Company and each Holder of shares included in a registration statement (with such modifications as shall be appropriate) to any underwriter with respect to any required registration or other qualification of such shares under any federal or state law or regulation of governmental authority. The indemnity and expense reimbursement obligations of the Company and the Holders under SECTIONS 8(a) AND 8(b) hereof shall be in addition to any liability the Company and the Holders may otherwise have. (d) If any action or proceeding (including any governmental investigation or inquiry) shall be brought or any claim shall be asserted against any person entitled to indemnity hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the party from which such indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all reasonable fees and expenses incurred in connection with the defense thereof. Any such fees and expenses borne by the Indemnified Party (including any reasonable fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the Indemnified Party, as incurred, within fifteen days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder), PROVIDED, that such Indemnified Party shall first undertake to reimburse all such fees and expenses to the extent it is judicially determined that such Indemnified Party is not entitled to indemnification hereunder. Any such Indemnified Party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees and expenses or (ii) the Indemnifying Party shall - 12 - have failed to promptly assume the defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the Indemnifying Party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the Indemnifying Party could not faithfully represent the Indemnified Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such Indemnified Party a conflict of interest may exist between such Indemnified Party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the Indemnifying Party shall be obligated to pay the fees and expenses of such additional counsel or counsels). The Indemnifying Party shall not be liable for any settlement of any such action or proceeding effected without its written consent, which consent shall not be unreasonably withheld. (e) If the indemnification provided for in this SECTION 8 is unavailable to an Indemnified Party (other than by reason of exceptions provided in those Sections) in respect of any Losses, then each applicable Indemnifying Party in lieu of indemnifying such Indemnified Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and indemnified parties in connection with the actions, statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and the Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such - 13 - Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this paragraph any legal or other fees or expenses reasonably incurred by such party in connection with any action, suit, claim, investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this paragraph were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section, if a Holder is an Indemnifying Party it shall not be required to contribute any amount in excess of the net proceeds (after giving effect to the payment of underwriter's discounts and other fees or expenses, if any) received by the Holder in connection with such public offering. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. SECTION 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to register shares pursuant to this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such securities who, after such assignment or transfer, holds at least 2,000 shares of Preferred Stock or 10,000 shares of Common Stock issued upon redemption or liquidation of the Preferred Stock (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalization), provided: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without limitation the provisions of SECTION 10 below; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act. For the purposes of determining the number of shares held by a transferee or assignee, the holdings of transferees and assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire shares by gift, will or intestate succession) shall be aggregated together and with the partnership. Notwithstanding the foregoing, OCM may assign its rights hereunder at any time in connection with a - 14 - liquidating distribution of assets to its partners. SECTION 10. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that, during the period of duration specified by the Company and a managing underwriter of Common Stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Securities Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Securities included in such registration; PROVIDED, HOWEVER, that: (a) such agreement shall be applicable only to registration statements of the Company that cover Securities to be sold on its behalf, or on behalf of Holders pursuant to demand registration rights hereunder, to the public in an underwritten offering; and (b) such market stand-off time period shall not exceed 120 days. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the shares (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. Notwithstanding the foregoing, the obligations described in this Section shall not apply to (i) transfers by OCM Holders in connection with a private placement pursuant to exemptions from the registration requirements of the Securities Act provided by Section 4(2) thereof and Regulation D thereunder, (ii) transfers by OCM to an OCM Affiliate in connection with an in-kind distribution or (iii) transfers by WES&S to a WES&S Affiliate. SECTION 11. MISCELLANEOUS. (a) NOTICES. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the parties at the following addresses or facsimile numbers: - 15 - (i) if to the Company, at 13952 Denver West Parkway Golden, Colorado 80401 Facsimile No.: (303) 704-4410 Attention: Roger E. Payton with copies to: Milbank, Tweed, Hadley & McCloy 601 S. Figueroa St. Suite 3100 Los Angeles, CA 90017 Facsimile No.: (213) 629-5063 Attention: Eric H. Schunk (i) if to any other person who is the registered holder of any Securities to the address for the purpose of such holder as it appears in the stock ledger of the Company All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto. (b) AMENDMENT. No change in or modification of this Agreement shall be valid unless the same shall be in writing and signed by the Company and the Holders of at least 80% of the Securities that are entitled to registration rights hereunder. (c) ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the Holders. This Agreement may not be assigned by the Company without the prior written consent of the Holders. (d) WAIVER. No failure or delay on the part of the parties or any of them in exercising any right, power or privilege hereunder, nor any course of dealing between the - 16 - parties or any of them shall operate as a waiver of any such right, power or privilege nor shall any single or partial exercise of any such right, power or privilege preclude the simultaneous or later exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and are not exclusive of any rights or remedies which the parties or any of them would otherwise have. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the other parties or any of them to take any other or further action in any circumstances without notice or demand. (e) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. (f) GOVERNING LAW. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. (g) FILING. A copy of this Agreement and of all amendments hereto shall be filed at the principal office of the Company. (h) TERMINATION. This Agreement may be terminated at any time by an instrument in writing signed by the Company and each Holder. (i) BENEFIT AND BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties and their executors, administrators, personal representatives, heirs, successors and assigns. (j) SEVERABILITY. In the event that any part of this Agreement shall be held to be invalid or unenforceable, the remaining parts hereof shall nevertheless continue to be valid and enforceable as though the invalid portions were not a part hereof. (k) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (l) ATTORNEYS' FEES. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees - 17 - (including any fees incurred in any appeal) in addition to its costs and expenses and any other available remedy. (m) EQUITABLE RELIEF. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce such provisions. - 18 - IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the day and year first above written. The Company: GEOLOGISTICS CORPORATION By: ______________________________ Roger E. Payton President and Chief Executive Officer Holders: OCM PRINCIPAL OPPORTUNITIES FUND, L.P. By: OAKTREE CAPITAL MANAGEMENT, LLC, its General Partner By: _____________________________ Stephen A. Kaplan Principal By: _____________________________ Vincent J. Cebula Senior Vice President LOGISTICAL SIMON, L.L.C. By: WESINVEST, Inc. its Manager By: ____________________________ Michael B. Lenard President EX-99.1 11 EXHIBIT 99.1 EXHIBIT 99.1 CARIBBEAN AIR SERVICES, INC. (A WHOLLY-OWNED SUBSIDIARY OF AMERTRANZ WORLDWIDE HOLDING CORP.) Greensboro, North Carolina FINANCIAL STATEMENTS December 31, 1997 CARIBBEAN AIR SERVICES, INC. (A Wholly-Owned Subsidiary of Amertranz Worldwide Holding Corp.) FINANCIAL STATEMENTS December 31, 1997 CONTENTS REPORT OF INDEPENDENT AUDITORS. . . . . . . . . . . . . . . . . . . . 1 FINANCIAL STATEMENTS BALANCE SHEET. . . . . . . . . . . . . . . . . . . . . . . . . . 2 STATEMENT OF INCOME . . . . . . . . . . . . . . . . . . . . . . . 3 STATEMENT OF STOCKHOLDER'S EQUITY . . . . . . . . . . . . . . . . 4 STATEMENT OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . 5 NOTES TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . 6
REPORT OF INDEPENDENT AUDITORS Board of Directors and Stockholder Caribbean Air Services, Inc. Greensboro, North Carolina We have audited the accompanying balance sheet of Caribbean Air Services, Inc. (a wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) as of December 31, 1997 and the related statements of income, stockholder's equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Caribbean Air Services, Inc. as of December 31, 1997 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Crowe, Chizek and Company LLP Oak Brook, Illinois June 5, 1998 CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) BALANCE SHEET December 31, 1997 - ------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $350,165 Accounts receivable, net of allowance for doubtful accounts of $87,240 7,117,501 Accounts receivable - related party (Note 5) 150,663 Miscellaneous receivables 230,771 Prepaid expenses 39,847 ---------- Total current assets 7,888,947 Property and equipment, at cost Ground support equipment 220,167 Office furniture and equipment 143,555 ---------- 363,722 Less accumulated depreciation 73,893 ---------- 289,829 Other assets 124,650 ---------- $8,303,426 ---------- ---------- LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities Revolving loan due to affiliate (Note 3) $826,075 Borrowings under line of credit (Note 2) 239,319 Accounts payable - Tradewinds (Note 5) 1,355,598 Other accounts payable 930,308 Accrued liabilities 2,183,330 ---------- Total current liabilities 5,534,630 Stockholder's equity Common stock, $.01 par value; authorized, issued and outstanding 100 shares 1 Additional paid-in capital 83,524 Retained earnings 2,685,271 ---------- Total stockholder's equity 2,768,796 ---------- $8,303,426 ---------- ----------
- ------------------------------------------------------------------------------- See accompanying notes to financial statements. 2. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) STATEMENT OF INCOME Year ended December 31, 1997 - -------------------------------------------------------------------------------
% of Amount Revenue ----------- ---------- OPERATING REVENUE $47,115,774 100.00% Cost of transportation 36,854,123 78.22 ----------- ---------- GROSS PROFIT 10,261,651 21.78 Selling, general, and administrative expenses 6,015,784 12.77 ----------- ---------- OPERATING INCOME 4,245,867 9.01 Other income (expense) Interest expense (Note 5) (172,065) (.36) Interest income 30,019 .06 Other (33,866) (.07) ----------- ---------- (175,912) (.37) ----------- ---------- INCOME BEFORE INCOME TAXES 4,069,955 8.64 Provision for income taxes (Note 7) 1,605,881 3.41 ----------- ---------- NET INCOME $2,464,074 5.23% ----------- ---------- ----------- ----------
- ------------------------------------------------------------------------------- See accompanying notes to financial statements. 3. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) STATEMENT OF STOCKHOLDER'S EQUITY Year ended December 31, 1997 - -------------------------------------------------------------------------------
Common Stock -------------------------- Additional Shares Paid-in Retained Outstanding Amount Capital Earnings Total ------------ ------------ ------------ ------------ ------------ Balance at January 1, 1997 100 $ 1 $ 83,524 $ 1,927,685 $ 2,011,210 Net distribution to parent - - - (1,706,488) (1,706,488) Net income - - - 2,464,074 2,464,074 ------------ ------------ ------------ ------------ ------------ Balance at December 31, 1997 100 $ 1 $ 83,524 $ 2,685,271 $ 2,768,796 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
- ------------------------------------------------------------------------------- See accompanying notes to financial statements. 4. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) STATEMENT OF CASH FLOWS Year ended December 31, 1997 - ------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $2,464,074 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 34,386 Bad debt expense 54,000 Changes in assets and liabilities Receivables (2,711,251) Prepaid expenses and other assets (14,555) Accounts payable - Tradewinds 837,406 Other accounts payable 516,071 Accrued liabilities 1,263,517 Due from parent 1,309,639 ----------- Net cash provided by operating activities 3,753,287 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (210,792) ----------- Net cash used in investing activities (210,792) CASH FLOWS FROM FINANCING ACTIVITIES Payments on revolving loan due to affiliate (3,566,264) Net borrowings on line of credit 239,319 ----------- Net cash used in financing activities (3,326,945) ----------- Net increase in cash and cash equivalents 215,550 Cash and cash equivalents at beginning of year 134,615 ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR $350,165 ----------- ----------- Supplemental schedule of noncash financing activities Reduction of related party receivables, net of payable accounted for as a distribution to parent $3,086,488 Reduction in federal income tax liability accounted for as a contribution from parent 1,380,000 Supplemental disclosure of cash flow information Cash paid during the year for Interest $ 3,776 Income taxes paid to state tax authorities 158,442
- ------------------------------------------------------------------------------- See accompanying notes to financial statements. 5. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) NOTES TO FINANCIAL STATEMENTS December 31, 1997 - ------------------------------------------------------------------------------- NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPANY BACKGROUND: In January 1996, Amertranz Worldwide Holding Corp. ("Holding") and Caribbean Air Services, Inc. (the "Company") were incorporated in the state of Delaware. Effective February 7, 1996, Holding concluded an asset exchange agreement with TIA, Inc. ("TIA"); its 51% owned subsidiary, Caribbean Freight System, Inc. ("CFS"); Amertranz Worldwide, Inc. ("Amertranz"); and the stockholders and convertible note holders of Amertranz. As part of this transaction, Holding received (i) all of the issued and outstanding stock of Amertranz, (ii) $1,379,110 in convertible notes of Amertranz, and (iii) the freight forwarding business of TIA and CFS. Holding then contributed the freight forwarding business of TIA and CFS to the Company in February 1996 in return for all of the issued and outstanding shares of the Company. TIA and CFS received a $10,000,000 promissory note in addition to 2,100,000 shares of common stock in Holding. DESCRIPTION OF BUSINESS: The Company operates an air freight forwarding business primarily serving the eastern half of the United States, Puerto Rico, and the Dominican Republic. REVENUE RECOGNITION: The Company is involved in brokering air cargo services for freight flown between the United States, Puerto Rico, and the Dominican Republic. Revenues and related direct costs are recognized when the shipments of cargo are completed. Monthly provision is made for doubtful receivables, discounts, returns, and allowances. CASH AND CASH EQUIVALENTS: Cash at December 31, 1997 includes $465,000 of overnight repurchase agreements. PROPERTY AND EQUIPMENT: Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets of three to five years. INCOME TAXES: The operations of the Company are included in the consolidated federal income tax return of Holding, and accordingly, federal income taxes allocated to the Company are computed on a separate return basis for the year ended December 31, 1997. Deferred tax assets and liabilities are recognized under the asset and liability method for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. - ------------------------------------------------------------------------------- (Continued) 6. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) NOTES TO FINANCIAL STATEMENTS December 31, 1997 - ------------------------------------------------------------------------------- NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - BORROWINGS UNDER LINE OF CREDIT The Company and certain of its affiliates have entered into a line of credit agreement (referred to as Accounts Receivable Management and Security Agreement) with BNY Financial Corporation. The line is secured by all assets of the Company and bears interest at the prime rate plus 2%. At December 31, 1997, the Company's portion of the outstanding borrowings were $239,319. NOTE 3 - REVOLVING LOAN DUE TO AFFILIATE The Company has received advances under a secured revolving loan agreement from TIA and CFS. The balance at December 31, 1997 of $826,075 includes accrued interest of $325,321. The revolving loan bears interest at the greater of 12% (1% per month) or the prime rate plus 4%. The revolving loan is secured by a first priority lien on all of the issued and outstanding shares of the Company and a lien on all of the assets of Holding and the Company. NOTE 4 - LEASES The Company is obligated under operating leases for equipment and warehouse space which expire between 1998 and 2002. The company also leases warehouse space on a month-to-month basis. The following is a schedule by year of the future minimum rental payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year at December 31, 1997: 1998 $182,726 1999 178,838 2000 88,841 2001 82,170 2002 102,713 -------- $635,288 -------- --------
- ------------------------------------------------------------------------------- (Continued) 7. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) NOTES TO FINANCIAL STATEMENTS December 31, 1997 - ------------------------------------------------------------------------------- NOTE 4 - LEASES (Continued) Rent expense was $507,307 for the year ended December 31, 1997. Under the terms of a cargo aircraft charter agreement with Tradewinds Airlines, Inc. ("Tradewinds"), a subsidiary of Tradewinds Acquisition Corporation, an entity related through common stockholders, the Company has exclusive rights until June 30, 1998 to the use of a leased L-1011 freighter aircraft. On May 18, 1998, this agreement was extended through June 30, 2000. While the Company is guaranteed the use of the L-1011 aircraft as needed, it pays only for actual use of the aircraft with a minimum annual usage requirement of 2,400 hours at a rate of $2,800 per hour resulting in an annual minimum commitment of $6,720,000. Total transportation costs purchased from Tradewinds related to this agreement amounted to $20,153,938 for the year ended December 31, 1997. NOTE 5 - RELATED PARTIES The following is a summary of transactions with related parties for 1997. AMERTRANZ WORLDWIDE HOLDING CORP. ("HOLDING") (Parent company) Payable to Holding, beginning of year $ - Advances from Holding 1,476,748 Reduction of payable, treated as capital contribution from parent 1,476,748 Payable to Holding, end of year - AMERTRANZ WORLDWIDE, INC. ("AMERTRANZ") (Direct subsidiary of Holding) Accounts receivable from Amertranz, beginning of year $ 356,807 Sales to Amertranz 561,894 Receipts from Amertranz 222,681 Reduction of receivable, treated as distribution to parent 696,020 Accounts receivable from Amertranz, end of year - Miscellaneous receivable from Amertranz, beginning of year 2,659,320 Payments to carriers on behalf of Amertranz 36,000 Charges to Amertranz for liability to carriers for future payments 68,161 Advances to Amertranz 1,101,235 Charges to Amertranz for accounting services provided 2,500 Reduction of receivable treated as distribution to parent 3,867,216 Miscellaneous receivable from Amertranz, end of year -
- ------------------------------------------------------------------------------- (Continued) 8. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) NOTES TO FINANCIAL STATEMENTS December 31, 1997 - ------------------------------------------------------------------------------- NOTE 5 - RELATED PARTIES (Continued) TARGET AIRFREIGHT, INC. ("TARGET") (Direct subsidiary of Holding) Account receivable from Target, beginning of year $ 549 Sales to Target 239,147 Payments from Target 89,033 Accounts receivable from Target, end of year 150,663 Miscellaneous payable to Target included in accrued liabilities 8,219 TIA, INC. ("TIA") (30% owner of Holding) Revolving loan due to Tia, beginning of the year $ 4,067,018 Principal payments to Tia 3,566,264 Revolving loan due to Tia, end of the year 500,754 Accrued interest to Tia, beginning of the year 247,367 Interest expense related to Tia debt 77,954 Interest payments to Tia - Accrued interest to Tia, end of the year 325,321
The revolving loan and accrued interest are included in the caption "Revolving loan due to affiliate." TRADEWINDS AIRLINES, INC. ("TRADEWINDS") (Indirect subsidiary of Tia) Payable to Tradewinds, beginning of the year $ 518,192 Purchases from Tradewinds 20,153,938 Payments to Tradewinds 19,316,532 Charges to Tradewinds for accounting services provided 68,640 Charges to Tradewinds for hangar space 36,194 Payments from Tradewinds 104,834 Payable to Tradewinds, end of the year 1,355,598
- ------------------------------------------------------------------------------- (Continued) 9. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) NOTES TO FINANCIAL STATEMENTS December 31, 1997 - ------------------------------------------------------------------------------- NOTE 6 - SUPPLIER AND CREDIT CONCENTRATION The Company charters the flight operations of an L-1011 from one supplier, Tradewinds. Although there are a limited number of companies that charter or lease L-1011 aircraft, management believes that other suppliers could provide similar services on comparable terms. A change in suppliers, however, could cause a delay in the air cargo operations and a possible loss of sales, which would affect operating results adversely. The air cargo industry is impacted by the general economy. Changes in the marketplace of this industry may significantly affect management's estimates and the Company's performance. Most of the Company's customers are located primarily in the eastern half of the United States, Puerto Rico, and the Dominican Republic. No single customer accounted for more than 10% of sales for the year ended December 31, 1997. The Company estimates an allowance for doubtful accounts based on the credit worthiness of its customers as well as general economic conditions. Consequently, an adverse change in those factors could affect the Company's estimate of its bad debts. NOTE 7 - INCOME TAXES Income tax expense for the year ended December 31, 1997 consists of: Federal, including deferred taxes of $52,000 $ 1,380,000 State 225,881 ------------- $ 1,605,881 ------------- -------------
A reconciliation of the provision for income taxes to the statutory U.S. federal income tax rate of 34% is as follows: Income taxes at the statutory rate $ 1,383,785 State income taxes, net of federal benefit 149,081 Change in valuation allowance for deferred tax assets allocated to income tax expense 64,200 Other 8,815 ------------- $ 1,605,881 ------------- -------------
For federal income tax purposes, deferred income tax assets and liabilities have been assumed by the Company's parent. Deferred income tax assets, net of liabilities, for state income tax purposes are not material. - ------------------------------------------------------------------------------- (Continued) 10. CARIBBEAN AIR SERVICES, INC. (A wholly-owned subsidiary of Amertranz Worldwide Holding Corp.) NOTES TO FINANCIAL STATEMENTS December 31, 1997 - ------------------------------------------------------------------------------- NOTE 8 - 401(k) PLAN The Company has a 401(k) Employees Retirement Savings Plan which covers substantially all employees. Eligible employees may elect to have amounts withheld from their gross earnings and deposited into their 401(k) account. The Company may elect to make discretionary matching contributions up to 10% of the participant's compensation as defined by the plan. For the year ended December 31, 1997, the Company elected not to make any contributions. NOTE 9 - CONTINGENCIES The Company is liable for employees' health care losses on claims up to $50,000 per individual per policy year and up to $519,241 per year on the group as a whole. A liability has been recorded for the estimate of claims pending at the balance sheet date. Additionally, the Company has guaranteed the payment of debt on behalf of two of its affiliates aggregating approximately $7,800,000 at December 31, 1997. The Company is involved in several pending lawsuits and threatened claims, which it intends to defend vigorously. Management believes any potential liability resulting from such litigation will not have a material adverse effect on the financial position of the Company. NOTE 10 - SUBSEQUENT EVENT The Company, its parent, and a third party have entered into a letter of intent whereby the parties are in the process of negotiating a definitive agreement with respect to the sale of certain assets of the Company. - ------------------------------------------------------------------------------- (Continued) 11. -----END PRIVACY-ENHANCED MESSAGE-----